Tax Rebate, How to Stimulate the Economy

Agree with @bripenny how any extra cash is splashed is a big unknown.

I’m not sure any of us are in a position to tell anyone else how they should spend any extra from the taxation changes. That might also apply to the benefits to some of the changes in deeming rates.

Both changes introduced by the government are not universal benefits for low income earners or pensioners or means tested recipients of government payments.

The government and press are generally quoting the maximum benefits possible. On a sliding scale many will receive a lower benefit than the maximum. As dodgy as NBN speed promises in some ways.

There will also be tax payers who are below the low income threshold for their circumstance. These are the lowest paid. There is no benefit for them.

The same can be said for pensioners with low levels of savings subject to the income test. Those with the least in super, investments and savings gain no additional benefit.

Many better off might see the changes as a positive outcome. It’s difficult to justify if there is not at least the equivalent maximum benefit to those in the community with the lowest levels of income, and probably those most affected by the increases in the real costs of living day to day.

At the same time the government changes have reduced the future tax take in targeting the better off. It would seem a very regressive policy, despite the obvious small benefits to those in the right financial circumstances?

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They may spend the money overseas eg via Ebay or on holidays and this will not help our economy nor support one local business. Paying down debt will help the economy as much of the money used for loans is foreign sourced, or will re-emerge in new loans to others.

Saving the money is probably almost as good as paying off debt. Either work as a means of putting more money back into the economy, and reducing national debt levels.

The problem is really the loss to the tax take that these measures will cause. This will reduce the ability of Govt to fund needed Govt services. As @mark_m notes it seems a very regressive policy when seen in the light of who it really benefits and what we will all miss out on.

If we had to spend over the next 4 or so years nearly $150 Billion it seems to me to been better spent in creating/improving local infrastructure and services. This would create jobs for at least a few years, it would create infrastructure to help us all whether that is roads, hospitals, schools, R&D facilities and so on. Public spending of this nature tends to stimulate economies particularly when private investment is either lacking or is targetting the wrong areas.

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I agree that spending the money overseas doesn’t help our economy @grahroll, but when I travel overseas I also put money into our economy by purchasing Travel Insurance, supporting my local travel agent, buying luggage and travel accessories, buying appropriate shoes and clothing for the country of destination, and so on.

I don’t see spending money on overseas travelling as not beneficial to the local economy.

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What you spend overseas is lost to overseas is the problem. You may also fly via United Airlines or Singapore Airlines or any other number of foreign owned air travel companies or those who travel by shipping most are foreign owned, who benefits most from this cost? Insurance for travel is mostly underwritten by Global partners not Australians. Travel accessories and luggage again contain a lot of foreign material/goods. I agree that some benefit Australia but I would think the majority is lost offshore.

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Agreed, but isn’t that the case for the great majority of our spending?:slightly_smiling_face:

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Isn’t it our discretionary spending that has the greatest potential to improve the local economy?

Holidays are a significant part of that.

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Perhaps I should clarify my thoughts here. If you travel out of Australia yes there is a small benefit to Australia, but anything you spend purely overseas eg you buy your food while away which spends our money in a foreign country…no benefit at all to our country. You buy your watch or camera from overseas while travelling is there any benefit to Australia? You buy some clothes overseas, the money is lost to Australia. Our spending on foreign soil degrades our balance of trade and improves that of the places we spend it in. At least if spent in Australia some small benefit flows to Australian businesses and people, but does anyone spend all their travel costs before they leave our shores? And as for EBay and similar if you buy from some they send it as a gift so even sometimes it avoids GST. If you buy from Amazon or similar the cost of supplying it here is built into their cost/profit margins. But I suppose it employs some people, pays some income tax but I would guess most is lost to us.

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Instead of all these cunning schemes to love your loot locally we could give attention to devising an economic system that doesn’t need to be constantly pumped by consumption.

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