Cuts to fire plan for sales

RETAILERS across the country are preparing sales and campaigns to lure in customers eager to spend their $1080 tax offsets, hoping a record $20 billion will flow through the tills in coming months.

But economists fear mums and dads will save their tax cuts this year instead of spending, with much of the boost gained by retailers to end up offshore.

Prime Minister Scott Morrison began spruiking the tax cuts yesterday after they passed the Senate on Thursday night.

Mr Morrison said it was now for Australians to decide how to spent the offsets of up to $1080, which will begin flowing within a fortnight.

“I backed them to do what they believe is best for them, their communities, their families. And so that’s what they’ll be able to do. It’s their money, it’s not mine,” he said.

National Retail Association boss Dominique Lamb said retailers were already preparing sales, marketing campaigns and deals to lure shoppers in to spend their tax cuts.

“Retailers are going to have fun with this; they will be putting deals together. We can definitely expect sales,” she said.

Reserve Bank Governor Philip Lowe this week warned the economy needed significant stimulus, including tax cuts and infrastructure spending, as he cut interest rates to 1 per cent. But Griffith University economist Tony Makin, who previously worked for Treasury and the Department of Prime Minister and Cabinet, warned that history had shown that sugar-hit stimulus like this often ended up in savings.

He said much of what would be spent would help retailers. But as the tax cuts go towards electronics, apparel and footwear, the money winds up back with manufacturers overseas.

“The first tax cut is really just a return of bracket creep,” Prof Makin said. “History shows that will be largely saved, though there will be some spending.”