Reax to UK government U-turn on 45% tax change
The U.K. government on Monday defended its decision to reverse a planned income tax cut for the highest earners, claiming it was a “distraction” from a wider package of financial reforms.
The U.K. government on Monday defended its decision to reverse a planned income tax cut for the highest earners, claiming it was a “distraction” from a wider package of financial reforms.
The British Chancellor Kwasi Kwarteng on Monday released a statement on Twitter saying that the government was “not proceeding with the abolition” of the top 45% rate of income tax paid on earnings above 150,000 pounds ($167,000) a year.
“We get it, and we have listened,” the statement said.
The policy to remove the top rate of income tax was controversial, sparking market turmoil and prompting crtiticism of the government that it was helping the wealthy few during a cost of living crisis.
Speaking to U.K. broadcaster Sky, Chief Secretary to the Treasury Chris Philip said the top rate tax cut had been a small part of a package of measures, and that the government was “proceeding with all the rest of the growth plan, the other 95 percent of it”.
“We’re going to get Britain’s economy growing, which ultimately will generate more tax revenues to pay for public services, see wages rising and see the jobs of the future getting created. So we’re going to focus on that 95 percent of the package, which I think commands widespread support and not proceed with this relatively small measure, which clearly did not command support,” he said.
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The policy had drawn criticism from inside the Conservative Party, with many MP’s threatening not to vote for the measures.
Former Transport Secretary Grant Shapps said the policy “didn’t stack up”, adding that he was “very pleased” the government had “U-turned” on its policy.
