UK Drops Tax Cut Plan After Pound Collapses
U.K. scraps tax cut for the rich that sparked market chaos and political backlash
British Prime Minister Liz Truss on Monday ditched her signature plan to cut taxes for the country's top earners after it triggered market turmoil and a huge domestic outcry.
Truss, who is less than a month into the job, proposed removing the top tier of income tax — meaning a saving for people who earn more than 150,000 pounds ($168,000) a year — as part of a set of unfunded economic reforms that caused the pound to fall to historic lows and damaged Britain's economic standing globally.
UK government drops plans for tax cut on wealthy that prompted turmoil on financial markets
The British government has scrapped plans of cutting taxes on the wealthy, a move that prompted turmoil in financial markets and led to record lows for the pound.
Treasury chief Kwasi Kwarteng said Monday he would no longer pursue plans to eliminate the top 45% rate of income tax paid on earnings above 150,000 pounds, or $167,000 a year.
"We get it, and we have listened," he said in a statement, adding that "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."
Kwasi Kwarteng U-turns on plans to scrap 45p tax rate
The government has U-turned on plans to scrap the 45p rate of income tax for higher earners.
Chancellor Kwasi Kwarteng told the BBC the proposals, announced just 10 days ago, had become "a massive distraction on what was a strong package".
"We just talked to people, we listened to people, I get it," he added.
The decision, which marks a humiliating climbdown for Prime Minister Liz Truss, comes after several Tory MPs criticised the plan.
On Sunday, Ms Truss had said she was committed to the policy.