Get our newsletter delivered directly to your inbox
I have already subscribed | Do not show this message again
Your email has been successfully registered.
The plan to scrap the top rate of tax also came under fire from the Conservatives on fears that the government may lose touch with voters.
On Monday, the British government announced it is not proceeding with the abolition of the highest 45-percent rate of income tax following huge financial turmoil and harsh criticism from within the Conservative Party.
It is clear that the abolition "has become a distraction from our overriding mission to tackle the challenges facing our country. We get it, and we have listened... This will allow us to focus on delivering the major parts of our growth package," including support for energy bills, other tax-cutting plans, and supply-side reforms, Exchequer Chancellor Kwasi Kwarteng said.
On Sept. 23, Kwarteng unveiled the largest tax cut package since 1972, citing that the top rate tax was higher than countries like Norway, the United States and Italy, and the removal was designed to attract top talents. Currently, Britain's basic income tax rate is 20 percent, and it increases to 45 percent for earnings above 150,000 pounds.
The Sept. 23 fiscal statement has thrown financial markets into turmoil as the British pound collapsed to record lows, and government borrowing costs rose sharply. Investors are concerned that the policy will ramp up public borrowing, bring serious fiscal uncertainty and push up already high inflation.
“This £640,000 saving for the CEOs would cover the energy bills of 256 British households for the entire year, whilst both van Beurden and Looney’s post tax income could pay for a years’ worth of free school meals for 13,286 children.” https://t.co/9f8edJXvuz
The plan to scrap the top rate of tax also came under fire from the Conservatives on fears that the government may lose touch with voters. Former Transport Secretary Grant Shapps commented on Sunday in a media article that "Tories aren't meant to govern like this."
"As a Conservative, I believe passionately in lower taxes, and a vibrant, competitive City of London, but this is not the time to be making big giveaways to those who need them least," Shapps said.
Maria Caulfield, a Conservative Member of Parliament (MP), tweeted on Sunday that as a working-class Tory, "I have no problem with bankers bonus removal as it is not taxpayers money but I can't support the 45p tax removal when nurses are struggling to pay their bills."
Another MP Julian Smith also tweeted on Sunday that the first job of an MP is to act in the interest of their constituents and in the national interest. "We cannot clap for carers one month & cut tax for millionaires months later," he said.