The British government on Monday decided to take back a proposal to cut taxes for citizens with incomes of £150,000 (Rs 1.3 crore) or more per year.
On September 23, Prime Minister Liz Truss had announced a programme of tax cuts and investment incentives to boost the United Kingdom’s economy. The country is currently facing an economic crisis, with many citizens struggling to cope with rising costs of living and increasing power bills.
The package announced by Truss included a tax reduction for high-earning citizens from 45% to 40%. However, several citizens and MPs from Truss’ own Conservative Party objected to the measure, leading to concerns that the policy could be voted down in Parliament, according to The Guardian.
British Chancellor of the Exchequer Kwasi Kwarteng said on Monday that the decision to cut taxes for people on incomes of £150,000 or more “has become a distraction from our overriding mission to tackle the challenges facing our country”.
He said that the government would not proceed with the abolition of the 45% tax rate. “We get it, and we have listened,” he said.
The fiscal package introduced by Truss included a total of £45billion (Rs 4.12 lakh crore) in unfunded tax cuts, reported The Guardian.
Commenting on this, the International Monetary Fund had urged British authorities to consider providing more targeted support to families and business instead of sizable tax cuts and sharply higher government spending, reported Reuters.
“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” the IMF noted last week. “Furthermore, the nature of the UK measures will likely increase inequality.”
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