The British government has unveiled a new mini-budget in the parliament, intending to cut household taxes and energy bills while driving economic growth.
In what represents the most significant tax cut budget since 1972, the new finance minister Kwasi Kwarteng’s sweeping new budget will see cuts to national insurance, stamp duty and the top tax rate.
During his speech in the House of Commons on Friday, Kwarteng said: “People will have seen the horrors of [Russia’s President Vladimir] Putin’s illegal invasion of Ukraine. They will have heard reports that their already-expensive energy bills could reach as high as 6,500 pounds ($7,254) next year.
“Mr Speaker, we were never going to let this happen. The prime minister has acted with great speed to announce one of the most significant interventions the British state has ever made,” he said, referring to the United Kingdom’s new PM, Liz Truss.
Kwarteng said the budget would address three key things: the energy price guarantee, equal support for businesses, and an energy markets financing scheme.
A national insurance rise announced earlier this year under the former finance minister, Rishi Sunak, will be cancelled, saving households 330 pounds ($368) a year.
The threshold for zero stamp duty on house purchases will be doubled to 250,000 pounds, and increased to 425,000 pounds from the previous 300,000 pounds for first-time buyers.
At the same time, a plan was brought forward to cut the lowest income tax rate from 20 to 19 percent and reduce the highest rate from 45 to 40 percent.
High tax rates damage Britain’s competitiveness,” Kwarteng said. “They reduce the incentive to work, invest and start a business. And the higher the tax, the more ways people seek to avoid them, or work elsewhere or simply work less … rather than putting their time and money to more creative and productive ends.”
But in what was seen as a controversial move while the country faces a cost-of-living crisis, Kwarteng announced he will scrap the European Union-inherited cap on bankers’ bonuses following Brexit to boost the financial services sector.