Liz Truss is poised to lower taxes in the “emergency Budget” this week, including the possibility of stamp duty reduction.
By rolling back the national insurance increase, the plan announced by Chancellor Kwasi Kwarteng on Friday would relieve strain on struggling families.
The PM has said that she is prepared to make “unpopular” measures that favour the wealthy in order to stimulate the economy. This includes scrapping the ceiling on City bonuses as well as the corporate tax hike that was planned for next year.
A reduction in stamp duty, intended to keep the property market active while interest rates increase, is said to be the “rabbit in the hat” for Mr. Kwarteng’s comments. The story in The Times was not refuted by Downing Street.
With official numbers indicating the government borrowed a further £11.8 billion in August and the cost of repaying the debt pile reaching a record £8.2 billion, the hazards of the exceptional tax-cutting policy were made clear this morning.
But Ms. Truss has made it plain that she is intent to concentrate on growth, contending that as the size of the “pie,” everyone benefits from increased income.
A day before their meeting at the United Nations conference in New York City, Joe Biden tweeted his disapproval of the economic programme she was promoting while she was speaking.
I’m beyond trickle-down economics, to put it mildly. The US President said, “It has never worked.”
Even if his criticism was undoubtedly directed at domestic audiences, it highlighted the divergent ideologies of the two leaders at a time when Ms. Truss has said that she wants to forge tighter connections with friends abroad.
During a series of televised interviews from the Empire State Building’s 102nd level observatory, Ms. Truss was questioned about her readiness for unpopularity.
‘Yes. Yes, I am,’ she said to Sky News.
“It’s crucial to me that the British economy expands because only then can greater salaries and more investment be made in towns and cities all throughout the nation. In the end, it is what will put more money in people’s wallets.
“Britain has to remain competitive in order to achieve that economic development.” We won’t see that investment and growth if we raise taxes, impose arbitrary levies on energy businesses, or have a high corporate tax rate.
She argued that despite projections as high as £150 billion, the cost to the public of her energy plan, which is being paid for by borrowing rather than a windfall tax on the earnings of energy and oil corporations, is “not what has been forecast.”
According to the research tank Resolution Foundation, Ms. Truss’s tax policies and energy assistance would result in Britain’s wealthiest families receiving twice as much assistance with living expenses as the poorest households.
Ms. Truss acknowledged that the gains would initially favour the wealthy, but she rejected accusations of injustice since she believed that economic progress would eventually benefit all of society.
She told Sky, “I don’t buy this premise that tax cuts are somehow unjust.”
We are aware that higher earners normally pay more in taxes, therefore when taxes are reduced, those earners frequently gain disproportionately since they already pay greater taxes.
“We should base the design of our tax system on what would make our nation prosperous. What will create an economy that benefits everyone in our nation?
Despite polls indicated that a windfall tax would be supported, she said that criticism that it was unjust to finance cutbacks by borrowing money that would be paid for by future generations is “what people on the left of politics typically say.”
Ms Truss stated to the BBC that she would be reversing the national insurance boost and axing the scheduled corporate tax rise that were the policy of Boris Johnson’s government.
I’ll make an effort to support people who are in need at all times. We didn’t want to see people struggling with exorbitant bills, which is why we took the measures that we did regarding energy costs, she added.
And for that reason, we’re also going to reverse the rise in national insurance.
So, yes, we do need to make tough choices to fix our economy.
“We need to examine our tax rates.” In order to draw in that investment, our company tax must be competitive with that of other nations.
Ms. Truss is wagering that advantageous outcomes will result from possibly contentious measures like those on bankers’ bonuses since she anticipates a general election in 2024.
The timing of the easing of the bankers’ pay-out limitation, which was imposed by EU regulation in the aftermath of the 2008 financial crisis and limits payouts to twice their salary, has drawn criticism.
At the next general election, she predicted that concerns like employment opportunities, investment, high-street improvements, road construction, and phone signals would be prioritised by voters.
The Institute for Fiscal Studies estimates that reversing the corporate tax increase would cost £17 billion year, while it notes that this amount does not take into consideration potential investment impacts.
The reversal of the national insurance rise, according to financial experts, would cost £13 billion a year.