Kwasi Kwarteng, the new finance minister in the UK, wants to reduce taxes in his country by 45 billion pounds. The aim is to boost purchasing power and growth. The British Mint has begun a dive.
The package of measures will benefit, among other things, the wealthier British. For example, Kwarteng removes, among other things, the highest rate of additional income tax (45%), which applies to incomes above £150,000. The basic income tax rate will be reduced by 1 percentage point, to 19%. Specifically, British citizens who earn £ 20,000 a year would have to pay £ 167 less. For those who earn 200,000 pounds, it increases to more than 5,000 pounds, the BBC figures. Landowners and businesses are also better off. The government is also scrapping its plans for a National Health Insurance and a corporate tax. The ceiling for the banker bonuses disappears. This is the biggest tax reform in 50 years.
Liz Truss ‘ new Conservative government had already announced the tax cut. With the plans, she hopes to strengthen the economy in the country, so that the interventions pay for themselves. In the British House of Commons, Kwarteng stated that it was aiming for 2.5% year-on-year growth, a level that the British have not reached since the 2008 financial crisis. Before that, her country will have to borrow 234 billion pounds. Since last week, Britain has officially been in a recession.
The financial markets immediately reacted strongly negatively to the intentions. Investors fear that the British will have to borrow more to close the gaps in the budget, with rising interest rates as an additional adverse side effect. The British pound fell against the dollar to a level of $1.10, approaching the lowest level in 37 years. On Monday morning, the pound fell to a value of $ 1,035 per pound at the opening of the stock exchanges in Asia, the lowest level of 2022. In one year, the British pound has fallen by more than 20 percent against the US currency.
