Truss Declares War on Trickle-Down Economics: A Radical Shift in Economic Policy Ahead of Growth-Focused Mini-Budget

Liz Truss has signaled a radical shift in economic policy ahead of a growth-focused mini-Budget on Friday, declaring that cutting taxes for the wealthy and profitable companies is not "unfair". The prime minister has signed off plans to cut national insurance, a policy that will disproportionately help the better-off, along with a reversal of a planned rise in corporation tax and the lifting of a cap on bankers' bonuses. This marks a stark difference with Joe Biden, whom she is meeting in New York today, who has criticized trickle-down economics as a failed policy.

Key Takeaways:

• The Truss administration believes that tax cuts are a key component of boosting economic growth, and that reducing taxes for the wealthy and business will stimulate growth.
• The mini-Budget on Friday will include a range of supply-side reforms, including the lifting of a cap on bankers' bonuses and the reversal of a planned rise in corporation tax.
• The government will introduce "investment zones" with lighter planning regimes and tax breaks to spur corporate investment, which will be less regulated and may prompt backlash from local communities.
• The new "investment zones" will eclipse the existing "freeports" program proposed by Boris Johnson, and will include tax reliefs, customs advantages, and looser planning restrictions.
• The plans mark a shift away from the priorities of Michael Gove, former levelling-up secretary, who focused on boosting investment in left-behind areas.
• The prime minister has stated that she does not accept the argument that cutting taxes is unfair, and that people on higher incomes pay more tax, so reducing taxes benefits them more.
• Truss has pointed out that the government has announced a vast state intervention to hold down energy bills, which will help everyone.

Statistics:

• About 40 councils will be written to inviting them to submit proposals for investment zones, which will benefit from a lighter planning regime and tax breaks.
• The government has announced a state intervention to hold down energy bills, which will help everyone.
• The new "investment zones" will be designed to attract more corporate investment, with a focus on low-tax, light-regulation policies.
• The research and development tax credits system will be extended, and the Enterprise Investment Scheme will be improved to attract more money into early-stage companies.
• The new zones will include fewer environmental rules, which could prompt backlash from local communities.

Sources:

• Liz Truss's interview on Sky News
• The UK government's announcements on tax cuts and investment zones
• The World Health Organization is not mentioned in the source material.