UK’s Hunt scraps most tax-cut proposals in mini-budget
London, Oct 17 (EFE).- The United Kingdom’s new finance chief Jeremy Hunt on Monday said he was scrapping almost all tax measures announced in the government’s so-called mini-budget, which sparked market chaos and sent the pound plummeting.
Hunt’s major overhaul of the budget was laid out in a snap statement just three days after the prime minister, Liz Truss, fired former chancellor of the exchequer, Kwasi Kwarteng, over his tax-slashing plan, which she initially supported.
“Firstly we will reverse almost all the tax measures in the growth plan three weeks ago that have not started parliamentary legislation,” Hunt said in a televised statement.
The former health secretary said he would keep Truss’ flagship energy price support package for households and businesses, but shortened the plan from the expected two years, adding that it would conclude in April, after the winter period.
Hunt said his measures and reversals would raise some 32 billion pounds for the Treasury each year.
“I’m announcing today a Treasury-led review into how we support energy bills beyond April next year,” he said, adding that he would seek to cut the taxpayer cost of the scheme while upholding support for the poorest households.
Hunt confirmed Monday that he would suspend plans to lower the basic rate of income tax from 20 to 19% and would reinstate a move to raise corporate tax from 19 to 25% in April.
Truss had already in early October announced that her and Kwarteng’s bid to reduce taxes for the country’s top earners would not go ahead.
The so-called mini-budget, published on September 23, triggered a run on long-term government bonds and sunk the pound toward dollar parity as uncertainties loomed over how the government would finance the huge tax cuts for high earners.
At the time, the Conservative Party government, led by the increasingly embattled Truss, stood by its proposal, saying it was necessary in order to attract investors to the UK.
On Monday, the markets and the pound rallied in response to Hunt’s announcement.
The UK’s new finance chief, however, warned that the new economic plan would require cuts to some public spending.
The full budget is due to be presented on October 31. EFE