Truss: Cancelled 45p tax cut was never a ‘priority policy’
Liz Truss has said the cancelled tax cut for people paying the top 45p rate of Income Tax was never a “priority policy” as she seeks to defend the U-turn.
The Prime Minister said she does “support a lower, simpler tax system”, but that “what we couldn’t allow is a fairly minor part of the package to become a distraction”.
The governmeent’s mini-Budget less than two weeks ago sent financial markets into turmoil and saw the Tories’ poll ratings dramatically slide against Labour to record lows.
The fiscal announcement included more than £45bn of debt-funded tax cuts and came after a more than £100bn package of energy support was also funded by more government borowing.
Truss and chancellor Kwasi Kwarteng moved yesterday to overturn the most controversial measure – the abolition of the 45p rate of Income Tax.
Truss today told the BBC: “I want us to be a competitive country, but I have listened to feedback. I want to take people with me.
“Yes, we are going to have to make tough decisions. Yes, we’re going into a tough winter. Yes, times are difficult.
“But fundamentally, you know, if people are concerned about something which was a distraction from the major policies, which I’ve outlined, like the energy price guarantee, like keeping taxes low, like getting the economy moving, I felt it was wrong to allow that distraction to continue from the major parts of our package because that is not a reflection of what my priorities are.”
Cabinet ministers indicated last week that there would have to be spending cuts to calm market concerns about the increases in government borrowing under Truss.
It was widely rumoured that Kwarteng would next month move to reverse a policy that keeps benefits payment increases in line with inflation, however there is a growing Tory backbench rebellion against such a move.
The Prime Minsiter refused to be drawn on the potential measure and told Sky News that a decision would be made in “due course”.