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The new British Prime Minister, Liz Truss, and the Minister of Finance, Kwasi Kwarteng, reversed this Monday, October 3, their controversial plan to eliminate the maximum rate of income tax, amid the rain of criticism they received. even from his own party.
It had not been discussed and the British government’s proposal to cut the 45% income tax cap for the richest in the country to 40% had already been scrapped, a setback that did not come at a good time for the new prime minister Liz Truss.
Arguing that the furor over the initiative was distracting them from their broader economic plans, Finance Minister Kwasi Kwarteng said Monday that the decision had been made with “humility and contrition.”
This cut, which is part of a broader package of economic measures, had been the target of criticism from some lawmakers who believe that public and welfare spending was going to be cut to finance lower taxes on the richest.
Since the plan was announced less than two weeks ago, investors accustomed to Britain being a pillar of the global financial community have reacted in horror, selling off British assets at such a rate that the pound hit a record low against the dollar and the Bank of England had to intervene to prevent the collapse of pension funds.
Lack of trust affects Liz Truss and her cabinet
Elected by party members but not the general public, Truss and Kwarteng seek to lift the economy out of a decade of stagnant growth with a very 1980s-style plan that cuts taxes and eases regulation, at the cost of of large loans.
However, his ill-received plan and decision to back down could put Truss and Kwarteng under further pressure and threaten political stability in a country that has had four prime ministers in the last six years.
The failure in one of the points of what has been presented as a “mini-budget” is the highlight of this Monday at the annual congress of the Conservative Party in the English city of Birmingham.
In his appearance before other members of the Government and the conservative base, Kwarteng stated that the commotion caused by his initiative to cut taxes on the wealthiest has been “a distraction” and “a little turbulence”, which should not prevent the rest of the government strategy.
With Reuters, AP and EFE
