Economists say reducing personal income taxes and further rate cuts that the central bank is about to pass will help boost the sluggish economy. After the increase in income, consumers will increase consumption before Christmas.
According to data from the Commonwealth Bank, income tax cuts and the central bank cut the official cash rate twice before the end of the year, and the stimulus to the economy is equivalent to a 1.25 percentage point cut in interest rates. Federal bank economist Stephen Halmarick said that coupled with bank regulators relaxing home loan restrictions and 3% wage increases, the Australian economy will “stabilize later this year and will have next year.” Improved”.
“Heavy weapons are about to arrive on the battlefield,” said Chris Richardson, a partner at Deloitte’s partner, “The Australian economy is about to receive heavy fire support.” He said that the recent rains have alleviated the impact of drought on agricultural production, and the weakening of the Australian dollar will also stimulate the economy. Richardson said: “In general, there are many strong positive factors. In general, the economy will improve before Christmas, and the trend will become more obvious after one year. The federal parliament may pass 158 billion personal income tax this week. The plan will reduce the tax rebate for middle- and low-income people by up to 1080 yuan, and most of the low- and middle-income people will spend it. The Australian central bank is preparing to cut interest rates for the second time this year, either tomorrow or next month, to cut interest rates to 1%.
Economists predict that by the end of 2019, the cash rate will fall to 0.75%, and it is expected that commercial banks will not fully pass the central bank to cut interest rates. One-third of households have mortgages, and after reducing the amount of home payments, there will be more disposable income to consume. ANZ economists believe that a one-time tax rebate of A$7.2 billion from low-income earners will increase household annual income by 0.6% after filing tax returns in July. ANZ said that from the historical effect of the Rudd government’s 900 yuan financial stimulus in 2008 and 2009, extra spending may be concentrated on retail and entertainment services. ANZ economists Adelaide Timbrell and David Plank said in a research report last week: “Because tax returns vary in time, We believe that consumption growth may slowly reflect.
“We believe that tax cuts will stimulate household consumption in the fourth quarter. However, in the past 10 years, Australian households have changed. Household debt is getting higher and higher, rigid spending is higher; less money is spent on retail. The way of sub-consumption may vary. Tax cuts are more effective than interest rate cuts, and ANZ’s Planck says the tax cuts will be more direct than the rate cuts because lower borrowing costs cost about 18 Month can only fully affect the economy. Planck said: “The Australian economy has already bottomed out and the housing market has stabilized. Household consumption is expected to pick up in the second half of the year. Federal bank economists predict that economic growth will increase from less than 2% in 2019 to 2.7% in 2020. Household consumption growth is expected to increase from 1.7% to 2.3%.
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