In the face of much criticism from the Labor opposition while the country is in recession, the British government finally decides to reverse the tax cut for the wealthiest.
The Chancellor of the Exchequer retires. This Monday, British Finance Minister Kwasi Kwarteng announced on Twitter for the first time that the income tax cut for the richest that had been announced a few days ago would be reversed. A measure that plunged the British financial markets into turmoil. “It is clear that the elimination of the 45% tax rate has overshadowed the mission to address the difficulties in our country. Therefore, I announce that we will not prosecute them,” he said tweeted Kwasi Kwarteng and adds: “We understand, we have listened”. On the BBC set this Monday morning, Kwasi Kwarteng brushed aside any resignation and refused to admit a mistake: this tax cut for the wealthy was “a huge distraction” that overshadowed “a solid package of measures,” he pounded.
The same story on the Prime Minister’s side. “We understood and we listened then Prime Minister Liz Truss left a wealth of messages in a message posted to her account. Twitter. The abolition of the 45% tax rate had become a distraction from our mission to get Britain moving. We are now focused on building a high-growth economy that funds world-class public services, raises wages and creates opportunities across the country.” The pound reacted little to the announcement of the measure’s phasing out, gaining modestly 0.3% early in the morning to $1.1206. The Liz Truss government, which has been in office for almost a month, is trying to save the package of measures presented on September 23 by editing its most controversial measure.
“Bad Values”
Discreetly dubbed the “tax event” – a euphemism for what actually is the biggest tax cut since 1972 – this mini-budget, announced by UK ministers at the end of September, addressed the main themes of Liz Truss’ campaign: deregulation, credit and lower taxes and social security contributions. On September 23, in a crowded House of Commons, Kwarteng hammered away at MPs that it was a “new era”, blaming the war in Ukraine and European laws for Britain’s economic woes.
The heavyweight of the majority, ex-minister Michael Gove, judged on the BBC on Sunday that “to have lowering taxes on the richest as the number one tax measure is to put forward bad values”. That’s enough to destabilize the government a little more. Liz Truss, who has been in power for just under a month, has seen disastrous poll numbers mounting two years before the next general election. A recent YouGov poll put the Labor opposition 33 points ahead, and according to another in two Brits (51%) they want it out. Hundreds of people took to the streets of Birmingham on Sunday, shouting “Tories out” or “Say it loud and clear, the Tories are not welcome here”. On the podium opposite the protesters, influential rail union leader Mick Lynch called the current situation a “class struggle” and called on the working class to “change the country” and “change society”.