Liz Truss backtracks on 45p tax rate cut in humiliating about-face

Liz Truss has made a humiliating about-face by abandoning plans to scrap the top 45p tax rate after facing a growing revolt by Tory MPs led by former Cabinet Ministers Michael Gove and Grant Shapps.

After insisting on Sunday that the controversial plan would go ahead, Truss concluded after discussions with her leadership team that the plan had no chance of getting through the House of Commons.

On Monday morning, Kwasi Kwarteng, her Chancellor, confirmed he would abandon the plan outlined 10 days ago in his ‘mini’ budget to cut taxes on Britain’s top 1 per cent; The 45p rate applies to income in excess of £150,000. In a statement, he said: “We understood and we listened.”

The Chancellor added: “It is clear that the removal of the 45p tax rate has become a distraction from our overarching mission of addressing the challenges facing our country.”

The pound rose as much as 0.9 percent against the dollar to $1.1274 in morning trade in Europe on Monday. Sterling hit a record low against the US currency a week ago after Kwarteng announced the debt-financed £45 billion tax cut package on September 23.

The withdrawal comes on the day Kwarteng addresses the Conservatives conference in Birmingham and will add to Tory’s concerns that he and Truss have lost control of government and the economy.

Truss had been warned that if she persisted in abolishing the 45p rate, she would face defeat in the House of Commons. Although it would have cost only between £2 billion and £3 billion a year to scrap it, it was seen by Tory MPs as a totem from a government that appeared to be losing touch with voters.

A cabinet minister close to Truss said: “It’s a very painful decision, but ultimately we had no choice. There was no way we were going to get through the budget.”

Truss and Kwarteng held emergency talks in Birmingham on Sunday, government insiders said, after facing a growing rebellion from Tory MPs who publicly said they would vote against the 45p measure.

Another senior minister said: “The politics behind it was just awful and I’m amazed the idea has lasted so long.”

On Sunday, Gove, a former cabinet minister, spearheaded the Tory mutiny over the tax cut, saying it was wrong at a time when “people are suffering”.

Shapps, a former transport secretary, also denounced the plan, saying it would not survive a parliamentary vote.

Another Tory MP, representing a working-class seat, described the idea of ​​cutting taxes on the wealthy while planning cuts in welfare and public services as “insane”.

Having withdrawn the 45p tax rate plan, Kwarteng and Truss could now come under pressure to reverse other proposed unfunded tax cuts that have drained public finances.

These include a £13bn cut in Social Security, which will benefit wealthier voters the most, and a £17bn plan to reverse a corporate tax hike – a policy which company leaders say is not a priority.

https://www.ft.com/content/29ebdd94-8c13-48fa-8718-4c86cce902a8 Liz Truss backtracks on 45p tax rate cut in humiliating about-face

Adam Bradshaw

TheHitc is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@thehitc.com. The content will be deleted within 24 hours.

Related Articles

Back to top button