By guest contributor Robert Lauria, Analyst, Atchison Consultants
Tax cuts first announced by the Coalition Government in the 2018 Budget are now starting to flow through the economy, the question is whether the cuts are having the impact the Government had in mind. Given the RBA is also concerned with recent GDP growth, there has been some doubt as to whether the tax cuts are in fact having the effects first anticipated.
Recent data has showed that the tax cuts recently announced and implemented by Treasurer Josh Frydenberg have not yet achieved what was hoped for. The graph below shows the Consumer Sentiment Index fell 1.7% in September. Recent data has also showed that roughly half of tax cuts beneficiaries would actually only spend half of their payments, with individuals actually willing to save the bulk of their tax cuts.
The above can be said to be consistent with second quarter GDP, released at the start of September which showed that Australia’s economy grew by 0.5% over the June quarter and by 1.4% over the year, equal to the worst recorded figure since the GFC.