Very difficult start and first coaster for Liz Truss. London announced on Monday, October 3, that it would abandon the abolition of the 45% tax rate for the richest, as desired by the Prime Minister.
We understand, and we’ve been listening. pic.twitter.com/lOfwHTUo76
— Kwasi Kwarteng (@KwasiKwarteng) 3 October 2022
It is clear that the removal of the 45% tax rate has overshadowed our mission to tackle the difficulties in our country. Therefore, I am announcing that we will not prosecute her Finance Minister Kwasi Kwarteng wrote this on Twitter. Before bidding: We understand, we listened. »
What’s in Truss’ plan?
Liz Truss has been in deep trouble since she announced her finance and household support plan on 23 September. Originally, the plan included a 45% to 40% reduction in the tax rate for the wealthiest citizens, a reduction in corporate tax and social security contributions, the suspension of green taxes that help finance investments in renewable energy, and the abolition of the tax on the most expensive real estate transactions. In theory, the money raised should fund the freezing of electricity and gas bills by £2,500 a year per person. household.
The Rumble of the British
This project by the Prime Minister is officially intended to combat the spending power crisis and the almost 10% inflation currently affecting the British. Except that these tax cuts, in favor of the richest, are not to the taste of the population. A historic social mobilization began in June with railway workers, dock workers and garbage collectors, before the arrival of Liz Truss. But for more than ten days, the protesters have not been relieved. On Saturday 1 October, thousands of Britons took to the streets again to protest against inflation, but also against the Prime Minister’s proposals. Some signs read: Taxes for the rich! ” Where “ Freeze prices, not people “.
Panic in the financial market
The budget plan – which would amount to between 100 and 200 billion pounds according to economists – also panicked the financial markets, which consider the government still too vague about the financing of the massive tax cuts (cost, impact). Ultimately, this means that the country may be forced to borrow even more from the markets to ensure the implementation of the plan.
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Symbolic of this market turmoil: on the day of the Liz Truss announcement, the British pound fell 5% to $1.0350, the biggest drop since 1985, when it was just $1.05. And UK debt interest rates have risen. On 29 September the Bank of England was forced to intervene. It now intends to inject £5 billion a day for thirteen days to buy government bonds, which will temporarily calm the markets.
The wrath of the Tories
Finally, the plan for massive tax cuts, especially for the wealthiest, has left the Conservative Party reeling. ” At a time when people are suffering and worrying about their loans and the size of their benefits, the tax cut for the richest is an important fiscal measure to put forward bad values MP Michael Gove said on the BBC on 2 October. More broadly, Liz Truss’s announcement sent the Conservative Party plummeting in public opinion. According to a YouGov survey/Times on 29 September the Conservatives collect only 21% of voting intentions against 54% for Labour, two years after the next general election.
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Faced with this wave of criticism, Liz Truss returned only to the main controversial measure. For the rest, the Prime Minister intends to stick to the course she has set herself. Then on Sunday, she argued that ” what would have been a mistake would have been not to act “, while acknowledging “communication error of his government. Words that should not contribute to raising its popularity rating. According to a recent YouGov poll. 51% of Brits think she should quit…