Retailers banking on cuts to inspire huge cash splash
RETAILERS are expecting a sugar hit this weekend as billions in tax and rate cuts start to hit the bank accounts of Queensland consumers.
Economists have forecast that consumers will spend up to $4 billion this coming quarter thanks to the Federal Government’s tax cut for low-mid income earners combined with others receiving tax returns.
White goods, furniture and fashion are three sectors set to benefit most.
Harvey Norman chairman Gerry Harvey said the surge would be a welcome boost, but couldn’t elaborate because his company will soon report its full year results.
“Billions of dollars are going to the consumers and they’re going to spend it,” he said.
“It’s a sugar hit … How long will it last? Well that’s anybody’s guess.”
Commonwealth Bank chief economist Michael Blythe said that tax cuts like this year’s $1080 refund to low-mid income earners was a rarity. “People often describe tax cuts as hamburgers and milkshakes because that’s all they get at a time,” he said.
“But the $1080 return means people are tempted to spend higher because it’s come in as a lump sum.”
National Retail Association chief executive Dominique Lamb said the spending might spike early, with some consumers predicted to hit the shops over the weekend.
“Consumers typically buy things they’ve been putting off like white goods and household items,” Ms Lamb said.
According to QUT Professor in marketing and consumer behaviour Garry Mortimer, early spending could signal people splashing out with money they soon expect to get.
He predicted that along with the increase of people buying large-ticket white goods and furniture they will also purchase smaller, more personal items like shoes and accessories.
The optimism is not shared equally across the economy.
Brisbane family business owner Jim Stocks said it was unlikely his home appliance and home renovation store would be impacted.
“We’re not feeling the love at the moment,” he said.
The last time the country saw a tax cashback of this scale was under the Rudd Government during the Global Financial Crisis.
The boost to the economy following the return saw shoppers spending around $19.2 billion in the 2009 January quarter.