Top earners in Great Britain will continue to have to pay a top tax rate of 45 percent. Finance Minister Kwasi Kwarteng announced this turnaround at the British Tories’ annual conference in Birmingham. “We understood, we listened,” wrote the conservative politician in a statement published on Twitter. He explained that rejecting the top tax rate could jeopardize the overall package of economic reforms.
Previously, prominent members of the Tory party, such as ex-ministers Michael Gove and Grant Shapps, had sharply criticized the tax breaks and the enormous national debt and indicated that they intended to vote against them in parliament.
Course crash after announcement of economic plans
The government feared a rebellion within its own party. Just over a week ago, Kwarteng announced the tax cuts, which should primarily benefit the richest in society. The new government of Prime Minister Liz Truss wanted to boost economic growth. After the announcement of the debt-financed plans, the pound rate plummeted. The British central bank felt compelled to step in and purchase government bonds with long maturities – without a ceiling.
Government has “clear plan”
Just two days ago, Kwarteng and Truss had rejected a U-turn. In an op-ed for the Sun tabloid, the Prime Minister wrote: “Not everyone is happy with what we are doing, but I want to reassure the public that the government has a clear plan of what is right for the country.” None of this will happen overnight, but it’s the right thing to do, Truss said.
Radiated (still) confidence on Sunday: Prime Minister Truss and Finance Minister Kwarteng in Birmingham
Kwarteng wants to stick to other, equally controversial parts of the economic plan – including tax cuts for other income groups despite enormously high inflation. With the decision on the top tax rate, the Truss government has come under heavy pressure. In a BBC interview, however, the finance minister rejected calls for his resignation. Opposition Labor Party finance spokeswoman Rachel Reeves said the government had lost economic credibility and damaged confidence in the UK economy.
fab/jj (dpa, rtre)
