JazzG wrote:
Mirth wrote:Should be fine for now - the markets reacted poorly because Truss and Kwasi injected credit risk into their plan which the BoE already alleviated. The markets don't actually care about a 5% tax cut.
The markets don't care but many Conservative MPs do. They see Labour surging ahead while the media focus on the 45% tax cut.
Supposedly the top 45% doesn't even bring in that much more money when you look at it in context to total tax income. In terms of the total cost of the budget it doesn't make up much either. However politically is difficult to defend dropping in the current climate. Gordon Brown must be laughing his head off, he put that 50% in knowing it would not bring in much income and knew the Conservatives would look bad for ditching it.
Yep, you're right - the 45% vs 40% tax rate only contributes £2bn to the national coffers which on a national scale isn't significant.
The issue is really the underlying principle of borrowing to provide a rebate during an economic downturn is a terrible signal whether you're an individual trader, a corporate or a national government. And they were punished for it - it was obvious to anyone listening to the budget which is why they went to lengths to prevent it from being scrutinised by an independent body.
To me it drives home that Truss and Kwasi are out of their depth. Keeping aside the morality, those two are playing University politics - it would have been perfectly possible to use the convoluted tax code to carve out enough wiggle room for the wealthy to claim exemptions but they decided to take on Gordon Brown's poison pill in the form of the 45% headline tax rate. One which no other Tory PM touched - for good reason - over the past 12 years. The Tory MP's aren't rebelling because of their morality - their rebelling because they realise that they are being led by incompetents who will likely cost them their seat in 2 years.
