The British government has done an about face on plans to abolish its top income tax rate after
the proposal drew public backlash and caused market turmoil.
The Conservative government of newly installed Prime Minister Liz Truss announced a slew of
tax cuts in recent weeks that led to financial market upheaval.
Taking the top rate of tax paid on incomes over £150,000 ($166,770 U.S.) from 45% down to
40% was seen as politically damaging, coming as it does with Britain struggling through a cost-
of-living crisis prompted by sky high inflation.
In the days following the announcement, the British currency fell to an all-time low, mortgage
deals were pulled from the market, and U.K. government bonds sold off at a historic rate,
leading to an intervention by the Bank of England.
On Monday, British Finance Minister Kwasi Kwarteng confirmed that the government would be
scrapping its plans to cut taxes for the country’s high income earners.
“We get it, and we have listened,” he said.
The British pound rose sharply in European trading following the reversal by the government.
The currency was up 0.8% against the U.S. dollar at one point but dipped to $1.1212 U.S. after
the finance minister’s formal announcement.
