Tax Refund Scheme
In July, the government of Australia concocted a $1080 Tax Refund Scheme.
- The maximum offset of $1080 will be available to taxpayers with taxable incomes of between $48,000 and $90,000. The offset is calculated on each person’s individual income not household income.
- Those who earned less than $37,000 will get $255 back. This gradually increases to $1080 for those earning $48,000.
- Anyone earning between $90,000 and $126,000 will get lower amounts. Those earning over $126,000 won’t receive any refund.
Results In
Bloomberg reports Australian Consumer Confidence Sinks Despite Cash Handouts
Australian households were gloomier this month as worrying headlines from abroad and weakness at home left them pessimistic about their prospects, regardless of government cash handouts.
Consumer confidence dropped 1.7% to 98.2 in September, with a reading below 100 signaling pessimists outnumber optimists, Westpac Banking Corp.’s survey showed. The poll of 1,200 adults conducted during the first week of the month contained a special question on recent household tax rebates, and found over half planned to save part or all of the cash.
“Pressure on family finances and concerns about the near-term outlook weighed on sentiment,” Westpac chief economist Bill Evans said Wednesday. “Concerns about the state of the economy, the international backdrop and employment are seeing consumers become more cautious.”
The result comes a day after a survey of Australian firms found sentiment poor there as well despite back-to-back interest-rate cuts and the government tax rebates. Australia’s economy has slowed sharply as households start to buckle under record debt and weak wage growth, and opt against spending.
How Does “Cash Back” Work?
- Government collects a massive amount of your money in taxes, then wastes most of it. Some might prefer the word “steals” to “collects”.
- Government returns a tiny piece of your money provided it believes you do not make too much money.
Cash Back Question of the Day
Is it any wonder this scheme failed to inspire confidence?
Mike “Mish” Shedlock
Gold is money. Fiat belongs to the government. The government doesn’t take your money, it’s the government’s money.
Anyone with a lick of sense should know anything “one-off” … will be considered “one-off” by recipients … with zero long term impact.
Dummies
So people will either pay down some debt or maybe make some small purchases. Both of which will be offset by the government debt issued to pay for the handout.
It would have a better uptake if the check said: “This is free money, printed out of thin air with no economic value backing it!”
I feel your pain, Australia. Send me the money and I guarantee to spend it for you.
One day, someone, somewhere will try smaller government, lower taxes and a budget that actually lives within it tax collections means.
I know. Hard to buy votes that way and make things more “fair.” Plus it would racist, misogynistic, homophobic and probably a bunch more -isms.
“One day, someone, somewhere will try smaller government, lower taxes and a budget that actually lives within it tax collections means.”
Nahhhhh…
Actually the Australian government hopes to run a surplus this year.. That’s why they are not spending money on infrastructure projects or raising the unemployment benefit..
I spent a few months there in 2017, $1,087 is about what a pack a day smoker pays for their cigarettes in 5 or 6 weeks, it isn’t exactly going to boost the economy.
So, I take it those in the Australian political and administrative apparatus, mostly earn between $48,000 and $90,000?
No, they earn much more. But they need to show they care about the little guy. Mind you a few hundred bucks is neither here nor there. No, the big deal in Australia is that members of parliament collectively own more than $330m of property so have a guess where all the stimulus is targeted.
Australia is well into the early stage of a huge housing bust that will financially ruin many, many middle-class families. A government tax rebate of several hundred dollars will not make a bit of difference.
Anecdote here.
Last week I was helping a young bloke pick up some items from a property the bank had repossessed and I had the opportunity to speak to the real estate agent handling the auction/sale. She was of the opinion that the property had lost $70-100k over the past 5 years despite various improvements the young fella had made to the 1970’s era house since he’d bought the place in 2014.
That said, developers are still building like mad over here. Maybe its the old story of keep building right up to the minute the bubble bursts and then worry about the consequences. Assuming it does of course. It might be a slow stagnation instead.