Liz Truss defends controversial tax cuts as pound plummets

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UK Prime Minister Liz Truss defended her government’s controversial announcement to cut taxes for citizens and businesses in an exclusive interview with Jake Tapper of CNN.

Truss told Tapper that by cutting taxes, his government was “encouraging companies to invest and we’re also helping ordinary people with their taxes.”

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While the cuts were to be expected, critics warn that they will be more beneficial to the wealthy than to most of British society.

Shortly after Truss Finance Minister Kwasi Kwarteng announced the cuts on Friday, the pound plunged nearly 2.6% to its lowest level against the US dollar since 1985.

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The UK Treasury said the cuts, which include lowering the maximum income tax rate to 40% from 45%, reductions in duties paid on home purchases and canceling a planned increase in business taxes, would eliminate £45 billion (about R$263 billion) of government revenues over the next five years.

Pressed about the accountability of his economic plan, Truss told Tapper, “I don’t really accept the premise of — premise of the question at all. The UK has one of the lowest debt levels in the G7, but we have one of the highest tax levels. We currently have a 70-year high in our tax rates.”

Despite the hit to public revenue, Truss confirmed in the interview that her government would still help citizens with energy bills this winter.

“We also put in place a package of measures to support consumers with energy prices, to ensure no one is having to pay more than £2,500 on their bills.”

The promise to help Britons pay their energy bills comes before what is predicted to be a brutal winter.

Inflation rose above 10% in July for the first time in 40 years, driven by rising energy and food costs. Household energy bills have already climbed 54% this year and could go even higher.

Truss was also criticized for making this promise while refusing to tax energy companies for their earnings. Instead, the government will rely on borrowing to cover the cost, which the opposition described as putting the cost on the country’s credit card.

Source: CNN Brasil

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