In major reversal, U.K. scraps tax cut for wealthy that sparked market turmoil

The new 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.

In a dramatic about-face, Treasury chief Kwasi Kwarteng said Monday he won't scrap the top 45% rate of income tax paid on earnings above 150,000 pounds ($167,000) a year.

"We get it, and we have listened," he said in a statement, adding that "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."