UK PM Truss to waive controversial tax cuts for the wealthy

British Prime Minister Truss and Chancellor of the Exchequer Courting decided not to cut the tax on the highest incomes. This means that the heavily criticized part of the new government’s economic plans has been postponed. Criticism came from abroad, including from the International Monetary Fund, and from within the Conservative Party.

On September 23, Truss and Quarting announced their economic plan that should lead to economic growth. It included an unprecedented support package of around 150 billion pounds (165 billion euros), as well as an unprecedented tax cut of 45 billion pounds (50 billion euros). The tax cut for the wealthy was a relatively small part (£2 billion), but it had significant symbolic value.

Investments aimed at curbing inflation and compensating for higher energy prices, should be paid, among other things, by increasing the national debt.

After the plans were announced, the British pound fell sharply, government bond yields rose and stock and bond prices fell on the stock exchange. The Bank of England had to step in and blame came from all sides that the plan would make the rich richer and the poor poorer.

Last night, Truss actually decided to delay removing the top tax bracket. According to British media, she first wanted to calculate the plan again.

“We got it and we listened,” Truss wrote on Twitter. She says the turmoil over tax cuts has distracted her too much from her mission to move Britain forward:

Minister Kwarteng says attention is now mainly focused on measures to compensate businesses and households for their higher energy bill. The next step is to cut taxes to “put money back into the pockets of 30 million hard-working people” and for economic growth.

This will be followed by stimulating supply-side reforms, including the acceleration of major infrastructure projects, the finance minister said.