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21st Sep 2022

Liz Truss admits her tax cuts will benefit the rich more than the poor – and she’s ok with it

Jack Peat

She also defended plans to remove the cap on bankers’ bonuses 

Liz Truss has admitted that her tax cuts will disproportionately benefit the rich more than the poor as her economic plans came under scrutiny in New York.

The Prime Minister is in America for the annual United Nations General Assembly (Unga) in her first foreign trip in the top seat.

She’s set to meet Joe Biden and Emmanuel Macron in the Big Apple, as well as the EU’s Ursula von der Leyen.

But the trip got off to a rocky start after the US President tweeted that he is “sick and tired of trickle-down economics” in a thinly-veiled (and perhaps unintended) reference to Truss’s economic policies.

The British PM has said she is prepared to be unpopular with her policies which will “ultimately deliver higher wages, more investment in towns and cities across the country”.

“That is what will ultimately deliver more money into people’s pockets, and it will also enable us to fund the services like the National Health Service.

“And in order to get that economic growth, Britain has to be competitive.”

She said putting up taxes, placing “arbitrary taxes” on energy companies or having high corporation tax would result in a lack of investment and growth which she said “will ultimately damage opportunities in this country”.

Truss also defended reports that Chancellor Kwasi Kwarteng will scrap caps on bankers’ bonuses during a mini budget announcement on Friday as she blamed the UK’s “relatively low growth” on a lack of capital investment.

“We haven’t had enough capital investment and yet we have one of the world’s best financial services centres,” she said.

“So what I want to see is that money in the City of London put to good use across our country – and yes, I’m prepared to do what it takes to get that money flowing.”

As she further laid the path for the bankers’ bonus announcement and tax-cutting, the PM admitted her tax cuts would disproportionately benefit the rich.

“I don’t accept this argument that cutting taxes is somehow unfair,” she said.

“I mean, what we know is that people on higher incomes generally pay more tax.

“So when you reduce taxes, there is often a disproportionate benefit because those people are paying more taxes in the first place.

“We should be setting our tax policy on the basis of what is going to make our country most successful, what is going to deliver that economy that benefits everyone in this country.”

While the prime minister remained bullish about her tax policies, she did admit it will be a “tough winter”.

But she added: “I’m determined my government takes every step and strains every sinew to get the economy going, to make sure we have a successful economy and as a country we can weather this storm.

“We will get through it.”

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