The United Kingdom has reversed its 45% top tax rate cut on the richest 1% of the economy just over a week after it was announced.
The UK Chancellor of Exchequer Kwasi Kwarteng announced a week ago that it will cut the top tax rate from 45% to 40% from April 23rd next year sending the UK Pounds spiraling down as investors scampered.
The move was criticised because the government did not show how it will fund the tax cuts suggesting that the new prime minister Liz Truss and her Chancellor Kwasi Kwarteng seemed bereft of reality.
We get it, and we have listened. pic.twitter.com/lOfwHTUo76
— Kwasi Kwarteng (@KwasiKwarteng) October 3, 2022
In a message to the general public, the chancellor tweeted “we get it, and we have listened” adding that “It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.”
What it means
The decision to cut the top rate of tax has already had a positive impact on the UK Pounds as it gained positively against the US dollar (£1=$1.12).
- Nigerians holding dollars and looking to convert the US dollars to UK Pounds will have fewer pounds as they would have had to if they converted last week when the exchange rate favoured the US dollars.
- Nigerians who live in the UK and earn within the income bracket of the top 1% will now pay income tax at the top 45% rate.
- The decision also seems to have stabilized the UK economy after investors reacted negatively to the decision suggesting that economic growth may have been impacted.
