Australia: Tax cuts to spur on household spending - ANZ

Analysts at ANZ point out that for the Australian economy, tax cuts are arriving in the form of tax refund payments from July and thinks that the boost to Australian households will be considerable as there are also some one-off payments to households.

Key Quotes

“We estimate the promised cuts and payments will total $7.2bn, raising annual household income by 0.6%. The tax cuts will be in the form of lump-sum tax refunds.”

“As tax returns vary in timing, we think a slower and more spread-out pattern of spending growth is likely. We believe the tax cuts will boost household consumption in the September and December quarters.”

“Over the last ten years, however, Australian households have changed. We are more indebted and our non-discretionary expenses are higher; we spend more on travel and less on retail. And this may affect how we spend, this time around.”