Liz Truss Tax Plan: Growing Criticism and Controversy

 What is the reason for the recent hatred of the new prime minister of the UK?

How many British want the resignation of Liz Truss, the new UK Prime Minister?

What effect has the tax plan of Liz Truss had on the financial markets of the UK?

Liz Truss tax plan has many critics. The issue of fighting the economic crisis is one of the biggest crises facing Liz Truss, the newly appointed PM of the UK, which has caused many problems for her since the beginning of her work. The new UK government led by Prime Minister Liz Truss wanted to boost the economy by lowering the tax rate for high earners. But after severe criticism, it has now changed course.

The reluctance of the new prime minister

There are many criticisms of the Liz Truss tax plan. At the beginning of the Congress of the conservative party, Truss had to endure criticism from the people and even from within his ranks. In a recent poll by Opinium for the Observer, Truss’s approval rating among Britons fell to -47 in a week – lower than former prime minister Boris Johnson’s approval rating, the agency said, shortly before he was forced to resign. 

The resignation of the Truss demanded by half of the British

Liz Truss’s tax plan has caused her popularity to decline. Opinium’s James Crouch called the poll the worst poll result for a Conservative prime minister since 2010. Within weeks, the approval rating for Truss was as high as that of Johnson or Theresa May, the former prime minister at the end of her term. Another poll by polling firm YouGov found that more than half of Britons (51 percent) want Truss to resign.

Shock in UK financial markets

The Liz Truss tax plan has shocked the UK financial markets. At the party’s four-day conference in Birmingham, Truss will have to convince her party members of her dreams, as resistance is growing there too. Michael Gove, the former UK secretary of state, criticized the BBC for the tax plans of the Truss government, which sent shock waves through the British financial markets during the week.

Supporting financial exemption packages

Liz Truss is trying to contain the damage after the pound weakened due to her borrowing plans. Truss recently admitted to the BBC that she should have done more to prepare the ground for his economic project. However, the Truss still supports a package that provides tax breaks and massive national debt relief. 

Ambiguity in how to finance the Truss growth plan

The Liz Truss tax plan has many uncertainties. The Truss Growth Plan, unveiled about a week ago, has been criticized for providing billions in additional costs, but there are few details on how it will be funded in the short term. According to experts, these measures could cost approximately 230 billion euros. The uncertainty of Liz Truss’s tax plan has caused fear among economists.

A sharp drop in the value of the pound against the dollar

British Chancellor of the Exchequer, Kwasi Kwarteng, also refused to provide details about this. In an article for the Telegraph, he only confirmed that he would present a credible debt relief plan in November. However, it is unclear whether these programs will increase the debt further or whether the measures will pay off on their own, as the government hopes. During the last weeks, the pound’s value against the dollar in the foreign exchange market reached its lowest level in the previous 37 years.

Negative outlook for UK government debt

Credit rating agency Standard & Poor’s recently joined the pessimistic view of other institutions, downgrading the UK government’s debt outlook from stable to negative. Moody’s agency and the International Monetary Fund have also expressed concerns about this. A worse rating can mean you have to pay higher interest rates to take out new debt, which limits the scope of action.

Downtrend of the bond market

The bond market was also falling. Eventually, the Bank of England intervened to reduce the turmoil. Conservative leader Jake Berry said that markets may have overreacted. He told Sky News: “Let’s see where the markets are in six months.”

The Truss tax program favours the rich.

This project is also controversial in the Conservative Party of Truss. The main issue here is the planned abolition of the top income tax rate of 45%. Some Conservatives worry about being seen as a party that cuts taxes for the richest while doing little for the poorest. Truss said he supports eliminating the top tax rate.

Changing the policy due to the fear of partisan riots

In this way, following the criticism of the UK government’s economic plans, London announced a change in its approach. UK Chancellor Kwasi Kwarteng announced in Birmingham that the top tax rate of 45% for high earners will no longer be abolished. 

Abandonment of the UK government from the tax plan

In this way, the UK government announced that it would abandon its plan to reduce the income tax of the rich. The Chancellor also announced that it is clear that the removal of the 45% tax rate will cause problems in the country, so I advise the non-following of this plan. With the announcement of the new UK government’s decision, the currency’s value rose slightly.

Reducing the income tax rate for the top deciles of the society from 45% to 40% was part of Liz Truss’s economic plan, which drew much criticism even from conservatives, and critics accused her of favouring billionaires amid the financial crisis. Before that, prominent members of the Conservative Party, such as former secretary Michael Gove and Grant Shapps, strongly criticized the tax breaks and the enormous national debt and announced that they would vote against the plan in Parliament. In this situation, the government feared a rebellion in its party.