U.K. Government Goes Full Tilt on Tax Cuts and Free-Market Economics

Sep 24, 2022

News Resource: The New York Times and CNBC

NEWS: From CNBC:

The new U.K. government announced a sweeping program of tax cuts and investment incentives Friday, as Prime Minister Liz Truss seeks to boost the country’s faltering economic growth.

Speaking to the House of Commons, Finance Minister Kwasi Kwarteng said the government wanted a “new approach for a new era focused on growth” and was targeting a medium-term 2.5% trend rate in economic growth.

The measures include:

• Cancellation of a planned rise in corporation tax to 25%, keeping it at 19%, the lowest rate in the G-20.

• A reversal in the recent 1.25% rise in National Insurance contributions — a tax on income.

• A reduction in the basic rate of income tax from 20 pence to 19 pence.

• Scrapping of the 45% tax paid on incomes over £150,000 ($166,770), taking the top rate to 40%.

• Significant cuts to stamp duty, a tax paid on home purchases.

• A network of “investment zones” around the U.K. where businesses will be offered tax cuts, liberalized planning rules and a reduction in regulatory obstacles.

• A claim-back scheme for sales taxes paid by tourists.

• Scrapping of an increase in tax rates on various alcohols.

• Scrapping of a cap on bankers’ bonuses.

The government estimates the tax cuts will total £45 billion by 2026-27.

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