Kwasi Kwarteng U-turns on plans to scrap 45p tax rate

[Eugene]

Source: BBC

Kwasi Kwarteng U-turns on plans to scrap 45p tax rate

By Nick Eardley
BBC political correspondent

3 October 2022

Plans to scrap the 45p rate of income tax have been reversed, Chancellor Kwasi Kwarteng has confirmed.

He said the proposals, announced just 10 days ago in the government's mini-budget, had "become a distraction".

"We get it, and we have listened," Mr Kwarteng said in a statement.

The U-turn, which marks a humiliating climbdown for Prime Minister Liz Truss, comes after several Tory MPs voiced their opposition to the plan.

Ex-cabinet minister Grant Shapps had warned the prime minister would lose a Commons vote on the proposal.

-snip-

Read more: https://www.bbc.com/news/uk-63114279

[Celerity]

1. Truss is a wannabe Thatcher Milk Snatcher clown. I hope the Tories implode under her fecklessness.

[T_i_B]

5. That's an insult to Thatcher!

Margaret Thatcher, for all her many faults at least knew how to use a calculator, consulted her ministerial colleagues and didn't ignore expert opinion at every single turn.

One of the major problems with politics since 2015 is the tendency to focus on ideological willy waving at the expense of getting the basics right.

[muriel_volestrangler]

2. I think Truss and Kwarteng thought they could fool money markets like they fool media and people

They wanted to get rid of the top tax rate; they are used to hiding bad news when other things will get more publicity. So along with the caps on energy rates, and the cuts in NI and basic rate income tax rates, they thought they could slip in the cut of the top rate, use as a reply "but we're cutting rates for everyone!" (trying to gloss over how much more the rich would benefit), and see it all mixed up with other problems (just as, for instance, Brexit-induced problems get hidden in pandemic-induced problems).

But the bond markets always do their maths, not just react to the top news story of the day. And when this unexpected tax cut turned up, they said "oh, that means higher interest rates than we had thought" - up those go, mortgage rates go up and products get withdrawn, and suddenly people are talking about a housing market crash - and that gets voters' attention. And then the Bank of England has to intervene to stop a pensions crisis, and people say "it's because government bond interest rates went up suddenly, and that's because of binning the 45% rate", and now we seem to be paying for this tax cut for the rich in oh so many ways - inflation, housing crash, pensions at risk ...

I think their general attitude is "and we would have got away with it, if it hadn't been for those meddling bond markets ...". They knew what the reaction would have been if they did it on its own; it was meant to get lost amongst everything else.

[3Hotdogs]

3. "But we're cutting the tax rates for everybody."

Well that one worked for Bush and Trump. Why shouldn't it have worked for Truss?

[Emrys]

4. ... leaving the Tories who lined up over the last week to defend it with egg on their faces,

along with the right-wing pundits who clambered aboard.

Meanwhile, the gains for Truss and Kwarteng's insider-trading hedge funder cronies, including Kwarteng's ex-boss Crispin Odey, from shorting the pound stand, and the continuing chaos in the market will no doubt keep paying off for them.