A fiscal maneuver such as has not been seen since the days of Margaret Thatcher. The Conservative government of Liz Trussthrough the mouth of the Chancellor of the Exchequer Kwasi Kwarteng (i.e. the Minister of the Treasury), announced a drastic tax cut with the aim of giving an electric shock to the British economy, now in recession, and set it on a path of growth. The surprise of this mini-budget the elimination of the highest tax rate on income, that 45% which took over 150,000 pounds: now even the richest will pay only 40%. At the same time, the base rate drops from 20 to 19%However, this has not prevented conservatives from being accused of favoring the wealthier classes, also because the other highly symbolic measure the elimination of the ceiling on the bonus for bankers.
Bankers and the cancellation of bonus limits
In 2014, on the basis of European legislation, it was established that the bonuses could not exceed double the salary: now the “free all” for the wolves of the City, with the aim of making London competitive with New York again and Hong Kong and show the world of finance that there are real benefits from Brexit. In the same “business-friendly” direction goes the renunciation of raising taxes on corporate profits from 19 to 23%, as had instead been planned by the previous government.
No VAT on foreigners’ shopping
There is also something for foreigners in this autumn mini-budget: those arriving from abroad will no longer pay VAT on shopping.
But obviously the bulk of the measures aimed at the internal audience: they range from tax relief on the purchase of the first home to the reduction of social contributions that affect the salaries of workers.
a huge and risky gamble that of the Truss government: the tax package just announced is worth at least 45 billion pounds (over 50 billion euros) and will be financed by resorting to new debt: but the costs of financing on the markets immediately shot up towards the high and the pound hit a new low against the dollar. Truss and his ministers are convinced that the growth of the economy they are aiming for will allow them to easily manage the new debt: but surely the conservatives are throwing away their traditional fiscal prudence. Economists are divided on the goodness of the recipe: there are those who feared the possibility of a speculative attack on the pound as in the Black Wednesday of 1992, when the British currency was forced to leave the European monetary mechanism. But surely a bet that can pay off on the political level, because after the years of uncertainty under Boris Jonshon, Liz Truss is now back on the path of neo-Thatcher ideological purity: and in this way she can regroup the traditional conservative electorate. And if you do indeed manage to revive the British economy, you will be able to present yourself to the electorate in two years with a result capable of guaranteeing another victory over Labor.