Britain’s Liz Truss gives up on tax cuts, but it may be too late

Lorenzo Bagnato

4 Ottobre 2022 - 14:30

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Liz Truss decided to come back on her decision to cut taxes for the wealthy after much backlash. Her reputation as PM might never recover.

Britain's Liz Truss gives up on tax cuts, but it may be too late

Few British Prime Ministers had a worse start of their tenure than Liz Truss. The Tory leader, which took power in a terribly difficult moment for the country, had one stroke of bad luck after the other, culminating with the worst possible decision they could take.
After a few days she took office inside 10th Downing Street, Queen Elizabeth II died at 96 leaving the country in shock. Then, the already tense situation in Ukraine took another bad turn when Putin announced partial mobilization of 300.000 new conscripts. After his speech, global markets plummeted in caos as investors looked for safe havens in the Dollar. This however meant that other currencies like the Pound would fall.

Then, Liz Truss announced the new fiscal plan for the United Kingdom. In the midst of the worst crisis in decades, the Tory party decided to cut taxes for the wealty. She strongly defended this move, claiming that it would encourage investments by the uber-rich into the country. This plan, however, had a fatal flaw: it was never clear how these cuts would be paid back.

Many started pointing out that it perhaps wasn’t the brightest of ideas to increase taxes of middle class families while cutting those of the richest. At least, it wasn’t a good idea now, while the Western world is experiencing the worst inflation in 40 years and the gas crisis will ensure costly bills throughout the winter.

A possible Labour comeback

The move was criticized by anyone on the political spectrum, including a rare criticism coming from the International Monetary Fund (IMF) and other Tories MPs. Not to mention a hopeless fall in Tories approval, conceding 33 points to the Labour Party.

The backlash was so strong that, after just one week of publicly defending this policy, Liz Truss and her cabinet decided to come back on the move. The tax cut on the richest will not be implemented, but part of the damage was already done.

After the announcement, mortgage rates immediately increased (something that will damage the working class further) as the Bank of England bought billions in government bonds to keep the Pound afloat. These expenses were to no avail, as Sterling fell once again to the worst rate in over three decades.

In short, a complete disaster by the newly established Tory government. As Politico points out, Liz Truss completely failed to read the room and understand what policies to implement first. Tax cuts on the rich might not be inherently bad, but there are times when they can happen and times when they objectively cannot.

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