London, 3/10: The new Liz Truss-led UK government on Monday made its first major U-turn on its central plank of tax cuts by withdrawing a policy to abolish the top rate for the wealthiest, following market turmoil and to avert an expected rebellion within the governing Conservative Party.
Chancellor Kwasi Kwarteng declared that the announcement in his mini-budget last month of a proposed abolition of the 45 pence tax rate, which applied to the top tier of income taxpayers from next April, had become a “massive distraction” to an otherwise sound growth plan for the economy.
It came after days of turmoil on the global financial markets spooked by the prospect of huge government borrowing costs and the pound tumbling against the dollar as the Bank of England had to step in to shore up the country’s pension funds.