The new British government has droppedĀ plans to cut income tax for top earners, part of a package of unfunded cuts thatĀ sparked turmoil on financial markets and sent the pound to record lows.

In a dramatic about-face, Treasury chief Kwasi Kwarteng said Monday he won’t scrap the top 45% rate of income tax paid on earnings above 150,000 pounds ($167,000) a year.

“We get it, and we have listened,” he said in a statement, 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.”

The U-turn came after a growing number of lawmakers from the governing Conservative Party turned on government tax plans announced 10 days ago.

It also came hours after the Conservatives released advance extracts of a speech Kwarteng is due to give later Monday at the party’s annual conference in the central England city of Birmingham. He had been due to say: “We must stay the course. I am confident our plan is the right one.”

Prime Minister Liz Truss defended the measures on Sunday, but said she could have “done a better job laying the ground” for the announcements.

Kwarteng told the BBC the focus on the top tax rate had become a “massive distraction” but said he hadn’t considered stepping down, according to Agence France-Presse.

“I’m very pleased that we’ve decided not to proceed with that because it was drowning out the elements of an excellent plan,” he said.

In a tweet early Monday, Truss also said the tax rate had “become a distraction from our mission to get Britain moving”.

Truss took office less than a month ago, promising to radically reshape Britain’s economy to end years of sluggish growth. But the government’s Sept. 23 announcement of a stimulus package that includes 45 billion pounds ($50 billion) in tax cuts, to be paid for by government borrowing, sent the pound tumbling to a record low against the dollar.

By Admins

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