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UK Announces Massive Tax Cuts to Stimulate the Economy

Reino Unido anuncia masiva bajada de impuestos para estimular la economía

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UK Finance Minister Kwasi Kwarteng announced Friday that the government will lower income tax from April 2023 and cut tax on house purchases in England and Northern Ireland as part of a growth plan to stimulate the economy.

In a statement to the House of Commons, Kwarteng revealed that the basic rate of income tax will be cut to 19% in April 2023, a year earlier (than planned), which means a tax cut for more than 31 million people in just a few months and the higher rate of 45% of that tax will be abolished.

The Executive also plans to lower the tax on house purchases (the so-called “stamp duty”) in England and Northern Ireland, raising to 250,000 pounds (286,000 euros) the price of the house above which this tax has to be paid.

In the case of first-time buyers, the threshold will be raised from 300,000 pounds to 425,000 pounds (from 343,000 euros to 487,000 euros), he said.

In addition, the new Chancellor of the Exchequer revealed that the planned increase in corporation tax will be eliminated and the current cap on bankers’ bonuses will be eradicated.

Until now, according to the current rules agreed upon after the financial crisis within the framework of the European Union, the bonus received by a banker cannot exceed twice his annual salary, unless there is a shareholders’ agreement.

He also reiterated that the recent increase in social security contribution determined by former Finance Minister Rishi Sunak will be reversed as of November 6.

The “new approach” to deal with the rising cost of living is based, the official explained, on three priorities: reforming the supply side of the economy, maintaining a responsible approach to public finances, and cutting taxes to boost growth.

In his speech, Kwarteng admitted that the government will adopt “difficult measures” in order to stimulate the country’s growth.

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