The British government yesterday dropped plans to cut income tax for top earners, part of a package of unfunded cuts unveiled only days ago that sparked turmoil on financial markets and sent the pound to record lows.
In a dramatic about-face, British Chancellor of the Exchequer Kwasi Kwarteng abandoned plans to scrap the top 45 percent rate of income tax paid on earnings above £150,000 (US$168,398) a year.
He and British Prime Minister Liz Truss have spent the last 10 days defending the cut in the face of market mayhem and increasing alarm among the governing Conservative Party.
Photo: Reuters
“We get it, and we have listened,” Kwarteng said in a statement.
“It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country,” he said.
The U-turn came after a growing number of Conservative lawmakers, including former ministers with broad influence, turned on the government’s tax plans.
“I can’t support the 45p tax removal when nurses are struggling to pay their bills,” Conservative MP Maria Caulfield said.
It also came hours after the Conservatives released advance extracts of a speech Kwarteng was due to give later yesterday at the party’s annual conference in Birmingham, England.
He had been due to say: “We must stay the course. I am confident our plan is the right one.”
Truss on Sunday defended the measures, but said she could have “done a better job laying the ground” for the announcements.
She also said the decision to abolish the top tax rate had been taken by Kwarteng alone.
Truss’ spokesman yesterday said the prime minister still had confidence in her embattled Treasury head.
Truss took office less than a month ago, promising to radically reshape Britain’s economy to end years of sluggish growth. However, the government’s announcement of a stimulus package that includes £45 billion in tax cuts, to be paid for by government borrowing, sent the pound tumbling to a record low against the US dollar.
The Bank of England was forced to intervene to prop up the bond market, and fears that the bank would soon hike interest rates caused mortgage lenders to withdraw their cheapest deals, causing turmoil for homebuyers.
The package proved unpopular, even among Conservatives. Reducing taxes for top earners and scrapping a cap on bankers’ bonuses while millions face a cost-of-living crisis driven by soaring energy bills was widely seen as politically toxic.
The change of direction lifts some of the political pressure on the government from inside the Conservative Party, but it still faces skepticism from markets and economists and mounting public opposition to the worsening cost-of-living squeeze.
Paul Johnson, director of the Institute for Fiscal Studies think tank, said that unless Kwarteng “also U-turns on some of his other, much larger tax announcements, he will have no option but to consider cuts to public spending: to social security, investment projects or public services.”
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique