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Kwasi Kwarteng reveals why he’s U-turning on plan to axe 45p tax rate
Kwarteng said the decision to cut the top rate of income tax had become a ‘distraction’ from the government’s mission to tackle the cost of living crisis
The government has made a dramatic U-turn on its controversial plan to axe the 45p rate of income tax, the chancellor has confirmed this morning.
Kwasi Kwarteng has announced that the government will not be proceeding with the abolition of the tax rate, which is paid for by people earning over £150,000 a year.
The plan was immediately met with backlash, with many political commentators saying it would only be handing a benefit to the UK’s wealthiest earners.
Analysis by the Guardian also suggested that more than two-thirds of the total tax saving would go to those with an annual income over £500,000 each – just 0.1% of adults.
In his announcement this morning, Kwarteng said it had become clear that the abolition of the tax rate had become ‘a distraction from our overriding mission to tackle the challenges facing our country’.
His statement continued: “As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened.
“This will allow us to focus on delivering the major parts of our growth package.
“First, our Energy Price Guarantee, which will support households and businesses with their energy bills. Second, cutting taxes to put money back into the pockets of 30 million hard-working people and grow our economy.
“Third, driving supply side reforms – including accelerating major infrastructure projects – to get Britain moving.”
Following his announcement, Kwarteng told BBC Breakfast the proposal had been ‘drowning out a strong package’, including support for energy bills and other tax cuts.
He said: “The prime minister decided not to proceed with the abolition of the rate… we talked together, I said this is what I was minded to do and we decided together, we were in agreement that we wouldn’t proceed with the abolition of the rate.”
And when asked if he had considered resigning, Kwarteng replied: “Not at all.”
Over the weekend, Prime Minister Liz Truss had told the BBC the decision to cut the top rate of income tax was a ‘decision that the chancellor made’, adding that she was ‘absolutely committed’ to it as part of a package to make the tax system ‘simpler’ and boost growth.