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LONDON — British Chancellor Kwasi Kwarteng has slashed taxes on Britain’s wealthiest as he promised a “new era” of economic policy focused exclusively on boosting growth and abandoning redistribution.
Unveiling his first tax return since his appointment by Prime Minister Liz Truss earlier this month, Kwarteng on Friday abolished the additional 45p rate of income tax for those earning over £150,000. From April 2023 there will now be a higher single rate of UK income tax at 40%. Kwarteng has also reduced the basic income tax rate to 19p. “It means we will have one of the most competitive and progressive income tax systems in the world,” he said.
The plan comes a day after the Bank of England warned that Britain’s economy may already be in recession.
Describe by the head of the Institute of Fiscal Studies as the “greatest tax-cutting event since 1972,” Truss is betting his premiership that tax cuts and increased government borrowing will spur growth.
Kwarteng also announced a property sales tax cut, reversed a planned corporate tax increase next year and reversed April’s increase in National Insurance, taxes paid by individuals. and their employers to fund state benefits. He lifted the cap on bankers’ bonuses, tightened rules on benefits for part-time workers and said the government would soon introduce legislation “to untangle the complex patchwork of planning restrictions and laws derived from the EU that limit our growth”.
“Growth is not as high as it should be,” said the Chancellor. “It made it more difficult to pay for public services that required higher taxes.”
“We are determined to break this cycle,” he added. “We need a new approach for a new era.”
After a wave of strikes across the country, Kwarteng also took aim at “militant” unions and said the government would legislate for unions to be required to put wage offers to a vote by their members.
Rachel Reeves, from the opposition Labor Party, said the chancellor had undertaken a “complete demolition” of the last 12 years in power of the Tories. “It’s all based on an outdated ideology that says ‘if we reward those who are already rich, the whole of society will benefit,'” she said.
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