The UK chancellor to the exchequer Kwasi Kwarteng announced that the government will scrap the 45% income tax cut plan announced only 10 days earlier, news agencies reported.
Speaking to news agencies, Kwarteng said the proposals were ‘a massive distraction on what was a strong package’. He said the government talked to people and listened to people.
“We get it, and we have listened,” he said. “This will allow us to focus on delivering the major parts of our growth package,” he further added.
We get it, and we have listened. pic.twitter.com/lOfwHTUo76
— Kwasi Kwarteng (@KwasiKwarteng) October 3, 2022
However, this move is likely to be a humiliation for prime minister Liz Truss who was chosen by her own party members to lead the country after she promised tax-cutting measures.
It was her party colleague and Boris Johnson-staffer Grant Shapps who warned her that the House of Commons would not vote on the proposal. Several Tory MPs also announced their opposition to the plan.
Truss’ and Kwarteng’s plan to drop the 45% rate which was to be paid by people earning more than £150,000 a year was criticised as unfair at a time when living costs were rising.
The announcements come after Truss-Kwarteng mini-budget roiled markets last week and the pound dipped to a historic low against the US dollar.
Despite that both Truss and Kwarteng defended the budget. However, some mismatch was noted when the prime minister appeared at a BBC programme last week where she said that the move to cut the top rate of income tax was Kwarteng’s decision. But on Monday, Kwarteng and Truss said that it was their joint decision during the broadcast of BBC Breakfast.
“No, we talked together, I said this is what I was minded to do and we decided together,” Kwarteng was quoted as saying by the BBC.
Following their U-turn, the chorus has grown with the Labour Party demanding that Kwarteng step down from his role.
“The Tories have destroyed their economic credibility and damaged trust in the British economy,” shadow secretary Rachel Reeves was quoted as saying by Sky News.
The Labour Party said that the government needs to ‘reverse their whole economic, discredited trickle down strategy’, according to a report by Sky News.
(with inputs from BBC and Sky)
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