Tuesday, October 4, 2022

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Liz Truss to cut taxes in certain government-elected parts of the country

Liz Truss plans to lower tax rates and do away with the rules in certain parts of the country elected by the government.

The prime minister reportedly plans to mark the areas as “investment zones” – and will argue the approach could boost economic growth.

Companies based in the carefully selected regions can ignore certain environmental regulations and pay lower tax rates.

And workers living there can pay personal income taxes and national insurances at reduced rates, the government supports sun on sunday newspaper reports.

Details of the plans are yet to be worked out, but an announcement could make it into Chancellor Kwasi Kwarteng’s emergency budget as early as Friday.

The plans to apply the tax cuts only in certain parts of the country may raise eyebrows, as the government has previously come under fire for playing political favorites.

A previous policy, the Towns Fund, selected areas to benefit from a £1bn investment pot, but this was mostly channeled into Tory areas.

An investigation by parliament’s spending watchdog, the Public Accounts Committee, concluded last year that the selection process to benefit from the fund was “not impartial” and that the decisions were “politically motivated”.

Thirty-nine of the 45 seats that received the first round of funding were represented by Tory MPs.

It is not clear which areas will benefit from the “investment zone” tax cuts or how they will be chosen.

Mr. Kwarteng, who was appointed by Ms. Truss earlier this month, will use Friday’s emergency budget to reverse Rishi Sunak’s corporate tax and national insurance increases.

Other policies are expected to include lifting the cap on banker bonuses, limiting payouts to twice a banker’s annual salary. The policy was intended to reduce risk-taking associated with bonuses, thereby reducing the risk of another financial crisis.

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