New UK finance chief reversing "almost all" tax moves
British finance minister Jeremy Hunt, seeking to quell a bond market rout, listed on Monday tax changes that he said would raise an extra 32 billion pounds (US$36.16 billion) a year and scaled back the government's energy price cap scheme. Among the changes was the indefinite suspension of a plan to cut the basic rate of income tax which had been due to fall in April next year under the original plans of Prime Minister Liz Truss that triggered the upheaval in financial markets. "We will reverse almost all the tax measures announced... three weeks ago," Hunt said in a televised statement, conceding last month's budget from his predecessor had harmed public finances. Hunt also said the government's huge energy price cap would only run until April, after which the government would seek ways to help the most vulnerable households. Other tax changes originally planned by Truss which will not go ahead included a cut in dividends tax, the creation of a new VAT-free shopping scheme and a freeze in alcohol duty rates plus new rules for self-employed people. "Taken together with the decision not to cut corporation tax and restoring the top rate of income tax the measures I've announced today will raise every year around 32 billion pounds," Hunt said. A cut to the rate of National Insurance and a cut to the stamp duty tax on property purchases will go ahead as planned, Hunt said. Sterling extended its gains against the dollar, to be up 1.2 percent at 11.20am local time, and government bond prices edged higher. The near total reversal of the economic plan leaves Truss, Britain's fourth prime minister in six years, battling to survive in Downing Street less than six weeks after she came to power promising bold tax cuts and deregulation to reignite economic growth. She has been forced to reverse course after markets reacted violently to her plan, hammering the value of the pound and government bond prices and forcing the Bank of England to intervene to protect pension funds. The Bank stuck to its schedule of ending the support on Friday, adding to the pressure on Hunt over the weekend to find ways to reduce spending before the bond markets re-opened. While he had been expected to reverse some of the tax cuts, the change to the energy support scheme had been unexpected. Truss had announced a two-year subsidy scheme to support households and businesses through the period of surging energy prices, costing 60 billion pounds in six months. Hunt said on Monday that the scheme would now run until April, but become more targeted and capped after that. Hunt would still deliver a fuller medium-term fiscal plan as scheduled on Oct. 31, alongside forecasts from the independent Office for Budget Responsibility, the Treasury said. (Reuters/AFP)