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Digital Desk, London. The United Kingdom (UK) government has announced a reversal of the bulk of its September tax-cutting measures in another emergency action to ensure economic stability and provide confidence in its commitment to fiscal discipline.
Chancellor of the Exchequer Jeremy Hunt said in a statement on Monday that the basic rate of income tax would remain at 20 percent until economic conditions allow for a cut.
The 1.25 percent dividend tax increase will remain in place and the VAT-free (value-added tax) shopping scheme for foreign visitors to the country will not be extended, Xinhua news agency reported.
The increase in corporation tax and the aim of maintaining the top 45-percent rate of income tax were added to the first package of government decisions worth 21 billion British pounds ($23.8 billion), according to the statement.
Hunt also said the support scheme for UK homes and businesses facing rising energy costs would only last until next April and that there would be a Treasury-led review afterwards into what support would be needed at that time.
The government unveiled the biggest £45 billion tax cut package since 1972 on 23 September to boost economic growth, but it caused turmoil in financial markets, as the British pound fell to record lows and government borrowing Costs increased rapidly.
Investors are concerned that the tax-cut measures will increase public borrowing, create severe financial uncertainty and fuel already high inflation.
To calm markets the Bank of England announced a temporary purchase of long-dated UK government bonds in late September and later stepped up the measures by increasing the maximum size of auctions and including index-linked gilts. Expanded bond purchases to.
The central bank confirmed on Monday that it ended these operations and stopped all bond purchases on Friday, noting that these actions had enabled a significant increase in the sector’s resilience.
(IANS)
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