British finance minister Hammond in budget tax U-turn

British Chancellor of the Exchequer Philip Hammond (R) and Prime Minister Theresa May (listen to a speaker during Prime Minister's Questions (PMQs) in the House of Commons in London on March 15, 2017
AFP

London (AFP) – Britain’s finance minister Philip Hammond announced a shock U-turn over planned tax hikes for the self-employed on Wednesday, one week after unveiling the measure in his flagship budget.

Hammond, a key member of Prime Minister Theresa May’s Conservative government, had faced a storm of criticism over the proposals, particularly from the right-wing press and senior MPs in his own Conservative Party.

The measure would have hiked up National Insurance payrolls tax on millions of self-employed people.

Critics had expressed deep concern at the proposal which broke an election pledge not to increase VAT, National Insurance contributions (NICs) or income tax, revealing divisions in the ruling Conservatives.

“There will be no increases in NICs rates in this parliament,” Hammond wrote in a open letter to lawmakers, reversing the government’s earlier stance that it was fair.

He added: “It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.

“In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the budget.”

Chancellor of the Exchequer Hammond had previously insisted that the move — designed to raise £2 billion ($2.43 billion, 2 billion euros) over the next two years — would help ease pressure on the social care system.

Labour leader Jeremy Corbyn blasted the government over the U-turn, arguing it had left “a black hole in the budget”.

He added: “It seems to me like a government in a bit of chaos.”

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