Is the Xmas bonus good for the economy?

[freediver]

It is not a handout if you earn the money yourself. It is the opposite of a handout. Get a dictionary.

[Jovial Monk]

It is money you weren't going to get, govt cuts tax rates, voila more money!

I think a lot of the tax cuts in the Howard PM years are not very sustainable now China's economy is heading for the cellar.

[freediver]

It is money you weren't going to get, govt cuts tax rates, voila more money!

You mean, not a handout.

[TomB]

Tom you can't buy insurance after you get sick.

No, but that's not the point. I buy it not for any health related reason but because I have to pay more tax if I don't have it. How crazy is that?

[Jovial Monk]

Contact your local MP if he is Liberal (or a Liberal Senator) and whinge loudly at them that you no longer want to pay your own health insurance and that they should call on Rudd to bring in a Bill to increase the threshold for the medicare surcharge levy so you can stop paying for your own health insurance. Nice little handout that would be

[boxy]

The world is deeply in trouble, when the government not only encourages people to increase the level of consumerism... but actually hands them the money to do it!

God god, if you want to spend money to stimulate the economy, hand out wads of cash to schools, public hospitals, community centres, etc., to buy new equipment, upgrade, and refurnish! Hell, hand it out to the Salvo's and the like and make christmas really memorable for the truly needy if you want to help out the retail giants quickly.

Encouraging people to spend, spend, spend whenever they get some spare cash (instead of paying off debt or saving), irresponsible madness aimed at an extremely short term "fix".

[Jovial Monk]

The upgrading and stuff--infrastructure--is next cab off the rank/

Don't have to spend bonus on consumerism: can get car serviced/repaired perhaps replace old fridge with new, insulate ceiling etc.

[mantra.]

Don't have to spend bonus on consumerism: can get car serviced/repaired perhaps replace old fridge with new, insulate ceiling etc.

A lot of people will be doing that, but it still all goes back into the economy. Thousands of families on Family Tax Benefits A will be missing out this Xmas because they receive their family payments at the end of each financial year. It was just announced that they will have to wait until next June/July. This has been a bit misleading and defeats the purpose of the exercise. Maybe the government has run out of money.

[Jovial Monk]

Treasury estimates 70% of the bonus will be spent, that is .25% more than the minimum .5% of GDP needed to have an effect.

I have seen an estimate that a tax cut returns $1.03 to the economy for every $1 reduction in tax.

You see, tax and interest rate increases are a very efficient brake on the economy, but a lousy accelerator. The reason is simple: after a period of rising interest rates consumers might be inclined to save the money lower interest rates give, or they might decide to accelerate paying off the mortgage. Very uncertain, unlikely, that they will just rush out and spend the money.

Considering the savings from lower petrol prices and interest rates (and not forgetting the tax cuts) has retail boomed?

[Jovial Monk]

$4.7Bn infrastructure spend announced today by Rudd.

They are doing all the right things. 2009 still gonna be a tough year.