The International Monetary Fund (IMF) has issued a damning judgment on the tax plan presented by the new British government on Friday. The UN monetary Cooperation Organization says the “extensive and unfocused” tax measures are likely to widen inequality in the United Kingdom (UK) and threaten to undermine monetary policy.
According to Opposition Leader Starmer, the IMF’s criticism underscores once again what a “mess” the government is making of the British economy.
The Truss government wants to eliminate the highest rate of income tax and reduce the profit, property and transfer taxes. There will also be a price cap costing billions for energy and the national debt will rise.
The common criticism is that this package makes the rich richer, the poor poorer and that the bill is laid on future generations.
The IMF agrees. The UK Government is being advised to allocate more targeted money to households and businesses that are struggling, rather than cutting taxes and boosting public spending.
Minister of Finance Kwarteng hopes that the wealthy part of the population will spend more money through the measures. The lower income groups should also benefit from this, with the result that the faltering British economy is picking up.
Labour leader Keir Starmer called the IMF criticism “very serious” and said this morning that the government is harming the economy on its own initiative. “This is a step that should not have been taken,” he said. Most economists have little faith in it, and neither do the financial markets. The British pound fell to its lowest level ever on Monday.