Britain: Biggest tax cuts since 1972

London, Thanasis Gavos

As of more massive tax cuts since 1972 and the budget of the Ted Heath government, analysts in Britain describe the morning announcements from the Chancellor of the Exchequer Quasi Kwarteng about reduced taxation.

The total of the tax cuts is believed to be bigger than the measures announced in 1988 by the Thatcher government.

Among other things, the so-called “mini-budget” of the government Tras presented to the House of Commons, includes:

• Cancellation of the planned increase in corporate tax from 19% to 25%
• Reversal (from 6 November) of the Johnson government’s 1.25% increase in social security contributions for workers and employers
• Reduction in stamp duty for the purchase of a house “from today”, as it is zero for the first £250,000 of the property’s value (double the current limit)
• Removal from next April of the top income tax rate of 45%
• Reduction of the basic income tax rate from 20% to 19% (accelerated by one year)
• Cancellation of the planned increase in fees for beer, wine and other spirits
• Removal of the limit on bankers’ bonuses
• VAT-free shopping areas for visitors from abroad.

At the same time, Mr. Kwarteng announced new legislation that reduces bureaucratic obstacles for the start of infrastructure projects and new rules for the process of calling strikes by unions (only after bargaining with employers has been exhausted).

In terms of immediately tackling energy accuracy, the Chancellor of the Exchequer revealed that the Energy Bill Relief Program for businesses announced this week will cost £60 billion over the six months it will run (October to April).

This package is added to the 150 million pounds of the household support packagewith a two-year freeze on annual charges for energy consumption at 2,500 pounds.

The financing of this economic package will be done with increased government borrowing. “It is absolutely necessary for the government to use its borrowing power to finance temporary measures to support families and businesses.” The exorbitant increase in government borrowing chosen by the Tras government has led in recent days to slide in the value of sterling.

Mr. Kwarteng said that these state interventions against energy precision will reduce inflation by five percentage points.

Nevertheless, in the debate in Parliament, the government received strong criticism, even from Conservative MPs, for the fact that the vaccine budget is not accompanied, as is usually the case, by estimates from the independent Office for Budget Responsibility on the fiscal implications.

Prime Minister Liz Truss had pledged during the race to succeed Boris Johnson to push ahead with immediate tax cuts, despite fears of further fueling inflationary pressures.

Mr Kwarteng defended the measures saying growth in the country is not as high as it should be in recent years. He cited “high taxes on capital and labor” as the cause, which have reduced investment. “We are determined to break this vicious cycle. We need a new approach for a new era, with tax incentives,” said the British Chancellor of the Exchequer.

Labour’s shadow Chancellor of the Exchequer Rachel Reeves has accused the government of returning to the tactic of spreading wealth through market mechanisms and that the new budget is an acknowledgment of the failure of 12 years of Conservative rule.

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