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She and her chancellor announced a series of tax cuts at a time when inflation is running at 10%. Even worse, they sidestepped the usual processes on fiscal res

She and her chancellor announced a series of tax cuts at a time when inflation is running at 10%. Even worse, they sidestepped the usual processes on fiscal responsibility and declined to explain how the tax cuts would be funded. The bonds market then panicked as a result, with the Bank of England having to step in and bail the market out to prevent gilts from entering a death spiral, which would have bankrupted pension funds. Since then, she's been a dead woman walking.

mytailorisrich 4y ago
Not all the tax cuts announced were bad or badly received. Especially, I think that the cancellation of the rise in corporation tax was very welcome and in fact economists now say that the rise to 25% will make the recession deeper and longer (unsurprisingly, frankly). The issue was that the other cuts, especially abolishing 45p income tax rate but frankly also the decrease of the basic rate, were not discussed, not funded (which is what spooked the markets since we already borrowed and spent like crazy during Covid), and frankly everyone agrees that they were useless. Of course abolishing the 45p rate now was also extremely bad symbolically (though in fairness it only exists since 2010-2012). I think the plan has shifted from "pro-growth, nevermind inflation" to "a good recession will solve inflation". And a 'good recession' along with higher interest rates, the incoming budget spending cuts, and maybe tax increases is also going to be quite painful for the people.
- paganel 4y ago
  > Not all the tax cuts announced were bad or badly welcomed. Not a tax cut per se, but I'm curious what will happen with the energy bill support scheme? That seemed like a good thing to implement, one for which Truss and her cabinet got a lot of critics from a certain part of the media. Granted, I'm not from Britain so maybe I'm reading the room wrong and that support scheme was, in fact, not liked by everyone involved, I wouldn't know.
  - mytailorisrich 4y ago
    Frankly, this energy support scheme is a blank cheque to the energy companies. It guarantees that the energy companies will fully profit from high energy prices, all in effect funded by the taxpayer, and Truss also rejected any windfall taxes on energy companies. I think it makes sense to limit it in its current form to this winter instead of 2 years (which is the latest status). It'll still be possible to reassess the situation next year and perhaps come up with a more targeted scheme if needed. Edit in response to reply: Truss had formally said in Parliament that there would be no additional taxes on energy companies when the £2500 price cap scheme was announced. The current windfall tax was implemented by Boris Johnson and considering it taxes energy companies at 25% instead of the normal 19% when the plan was, and again is, to tax all businesses at 25%, it's more spin than anything else.
    - makomk 4y ago
      It's not exactly true that Truss "rejected any windfall taxes on energy companies" even though the opposition Labour party keep on claiming that: https://www.channel4.com/news/factcheck/factcheck-labour-keeps-repeating-misleading-claim-on-energy-windfall-tax https://www.channel4.com/news/factcheck/factcheck-labour-kee... Basically, the Tories had already placed a windfall tax on UK oil and gas before Truss even became PM that's almost identical to the one that Labour have called for, and no-one has proposed removing it. (To some extent, it looks like Labour copied the existing Tory tax.) The main reason why Truss' original proposal required so much more taxpayer funding was that her price cap lasted for two years rather than six months - Labour were relying on windfall tax revenue from well before the start of the price subsidy to make their numbers add up and still couldn't quite do it, so there's no way to extend it for longer without massive government borrowing. Most of the media coverage didn't explain this at all, they just repeated Labour's claims that all that government borrowing was because the Tories were in the pockets of energy companies and rejected a windfall tax. Nor did they explain the practical consequences of the price cap ending in April. All of the numbers thrown around for the cost of Truss' longer price cap assumed energy prices would still be unaffordably high by then, but no-one pointed this out and what it would mean for households. Of course, the moment the government annouced their energy support would end in April there were headlines everywhere about the huge bills this could cause for households.
- makomk 4y ago
  Now that the rise in corporation tax to 25% is back, the UK press are of course pushing claims by economists that it will make the oncoming recession deeper and longer. That narrative was nowhere to be found prior to the u-turn though, with the media consensus being that of course lower corporation tax wouldn't help grow the economy and only ideologically-driven right wingers who ignored the evidence believed otherwise. It's another one of those scenarios where whatever the government is doing at the time is the wrong choice.
  - mytailorisrich 4y ago
    That narrative that the rise is hurtful to businesses, and thus the economy, has always existed. Of course what changes is what the media choose to report, but you'll note that in any case it certainly isn't making a lot of noise that economists are not keen. It's quite a hike and it sends the UK among the highest taxed countries in Europe...
- edmcnulty101 4y ago
  Ya'll only have 25% corporate tax rate in England? America is jealous.
  - mytailorisrich 4y ago
    The issue is that it'll send the UK up the chart and among the higher rates in Europe at a time when the economy is not going well and when the country needs to sell itself while outside of the EU and single market. Btw, the US's the federal rate is 21% (which is also about the European average) but I suppose states may add their own on top.
edmcnulty101 4y ago
Oh yeah. That'll do it. Jesus. That sounds really bad.

mytailorisrich 4y ago

Not all the tax cuts announced were bad or badly received. Especially, I think that the cancellation of the rise in corporation tax was very welcome and in fact economists now say that the rise to 25% will make the recession deeper and longer (unsurprisingly, frankly). The issue was that the other cuts, especially abolishing 45p income tax rate but frankly also the decrease of the basic rate, were not discussed, not funded (which is what spooked the markets since we already borrowed and spent like crazy during Covid), and frankly everyone agrees that they were useless. Of course abolishing the 45p rate now was also extremely bad symbolically (though in fairness it only exists since 2010-2012). I think the plan has shifted from "pro-growth, nevermind inflation" to "a good recession will solve inflation". And a 'good recession' along with higher interest rates, the incoming budget spending cuts, and maybe tax increases is also going to be quite painful for the people.

paganel 4y ago
> Not all the tax cuts announced were bad or badly welcomed. Not a tax cut per se, but I'm curious what will happen with the energy bill support scheme? That seemed like a good thing to implement, one for which Truss and her cabinet got a lot of critics from a certain part of the media. Granted, I'm not from Britain so maybe I'm reading the room wrong and that support scheme was, in fact, not liked by everyone involved, I wouldn't know.
- mytailorisrich 4y ago
  Frankly, this energy support scheme is a blank cheque to the energy companies. It guarantees that the energy companies will fully profit from high energy prices, all in effect funded by the taxpayer, and Truss also rejected any windfall taxes on energy companies. I think it makes sense to limit it in its current form to this winter instead of 2 years (which is the latest status). It'll still be possible to reassess the situation next year and perhaps come up with a more targeted scheme if needed. Edit in response to reply: Truss had formally said in Parliament that there would be no additional taxes on energy companies when the £2500 price cap scheme was announced. The current windfall tax was implemented by Boris Johnson and considering it taxes energy companies at 25% instead of the normal 19% when the plan was, and again is, to tax all businesses at 25%, it's more spin than anything else.
  - makomk 4y ago
    It's not exactly true that Truss "rejected any windfall taxes on energy companies" even though the opposition Labour party keep on claiming that: https://www.channel4.com/news/factcheck/factcheck-labour-keeps-repeating-misleading-claim-on-energy-windfall-tax https://www.channel4.com/news/factcheck/factcheck-labour-kee... Basically, the Tories had already placed a windfall tax on UK oil and gas before Truss even became PM that's almost identical to the one that Labour have called for, and no-one has proposed removing it. (To some extent, it looks like Labour copied the existing Tory tax.) The main reason why Truss' original proposal required so much more taxpayer funding was that her price cap lasted for two years rather than six months - Labour were relying on windfall tax revenue from well before the start of the price subsidy to make their numbers add up and still couldn't quite do it, so there's no way to extend it for longer without massive government borrowing. Most of the media coverage didn't explain this at all, they just repeated Labour's claims that all that government borrowing was because the Tories were in the pockets of energy companies and rejected a windfall tax. Nor did they explain the practical consequences of the price cap ending in April. All of the numbers thrown around for the cost of Truss' longer price cap assumed energy prices would still be unaffordably high by then, but no-one pointed this out and what it would mean for households. Of course, the moment the government annouced their energy support would end in April there were headlines everywhere about the huge bills this could cause for households.
makomk 4y ago
Now that the rise in corporation tax to 25% is back, the UK press are of course pushing claims by economists that it will make the oncoming recession deeper and longer. That narrative was nowhere to be found prior to the u-turn though, with the media consensus being that of course lower corporation tax wouldn't help grow the economy and only ideologically-driven right wingers who ignored the evidence believed otherwise. It's another one of those scenarios where whatever the government is doing at the time is the wrong choice.
- mytailorisrich 4y ago
  That narrative that the rise is hurtful to businesses, and thus the economy, has always existed. Of course what changes is what the media choose to report, but you'll note that in any case it certainly isn't making a lot of noise that economists are not keen. It's quite a hike and it sends the UK among the highest taxed countries in Europe...
edmcnulty101 4y ago
Ya'll only have 25% corporate tax rate in England? America is jealous.
- mytailorisrich 4y ago
  The issue is that it'll send the UK up the chart and among the higher rates in Europe at a time when the economy is not going well and when the country needs to sell itself while outside of the EU and single market. Btw, the US's the federal rate is 21% (which is also about the European average) but I suppose states may add their own on top.

edmcnulty101 4y ago

Oh yeah. That'll do it. Jesus. That sounds really bad.