UK scraps tax cut for wealthy that sparked market turmoil

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The British government has dropped plans to cut income tax for top earners, part of a package of unfunded cuts that sparked turmoil on financial markets and sent the pound to record lows.

Treasury chief Kwasi Kwarteng said Monday that he would abandon plans to scrap the top 45% rate of income tax paid on earnings above 150,000 pounds ($167,000) a year.

He said "it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country."

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Reducing taxes for top earners and scrapping a cap on bankers' bonuses while millions face a cost-of-living crisis driven by soaring energy bills was widely seen as politically toxic.

Truss and Kwarteng insist that their plan will deliver a growing economy and eventually bring in more tax revenue, offsetting the cost of borrowing to fund the current cuts.