UK treasury secy Kwarteng rushes back from US as PM Truss mulls new tax-policy U-turn

Reports in UK media suggest that British Prime Minister Liz Truss is considering another tax policy U-turn. British finance minister Kwasi Kwarteng cut short his visit to the International Monetary Fund meeting in Washington and has headed back to London amid the reports. 

The chancellor left the US capital a day earlier than planned, signalling that a U-turn over UK’s plan to scrap a rise in corporation tax is on the cards.

The reports said that PM Truss was considering reversal of more of the controversial “mini-budget”. Sky News, citing sources, said that discussions were on in Downing Street about scrapping elements of the plan that caused turmoil in financial markets.

The Sun newspaper said that Truss was considering allowing a rise in corporation tax to take place next April. Truss had promised to halt this in her bid to be prime minister.

Finance minister Kwasi Kwarteng, asked repeatedly in an interview with BBC television whether the reports of a change of policy on corporation tax were accurate, said that he was focused on his growth plan.

“Our position hasn’t changed. I will come up with the medium-term fiscal plan on the 31st of October, as I said earlier in the week, and there will be more detail then,” he said on the sidelines of International Monetary Fund meetings.

Kwarteng is due to announce his medium-term budget plans on Oct. 31, alongside independent fiscal forecasts.

Truss faces huge pressure from within her own Conservative Party to change her push for 43 billion pounds ($48.8 billion) of unfunded tax cuts. Polls have shown that Truss’ support has collapsed.

Some lawmakers have pondered whether she should be removed from the job only a month after becoming Britain’s fourth prime minister in just six years since the Brexit referendum.

Kwarteng, asked by the BBC about any discussions going on back in London to tear up his package, said: “I speak to the prime minister all the time, and we are totally focused on delivering the growth plan.”

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He and Truss bowed to pressure earlier this month and ditched part of the mini-budget which would have eliminated the top rate of income tax, something they had said would help spur Britain’s sluggish economic growth rate. The IMF has said it would worsen inequality.

(With inputs from agencies)

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