‘No evidence’ tax cuts for top tier earners stimulate the economy

‘No evidence’ tax cuts for top tier earners stimulate the economy

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Former Labor Minister Stephen Conroy has criticised the federal government’s proposed tax cuts ahead of the 2020-2021 budget for failing to deliver the stimulus required to kickstart the nation’s pandemic recovery.

The government flagged a possible tax cut could be given to the wealthiest 10 per cent of Australians in a bid to funnel more money into the economy.

Mr Conroy told Sky News there was no evidence anywhere in the world which suggested cutting taxes for the wealthier population was a successful economic stimulus.

“If you give it to the bottom 50 per cent of the population, they will spend almost 100 per cent of it, that is what the studies show,” he said.

“If you give the wealthiest per cent of the population at $10,000 a year tax cut, which is what they’re talking about doing, then all of the studies show that they don’t actually spend it.

“Whereas if you give it to people who are on the pension, people who are paying down their debt, they are desperate to spend the money to keep their heads above water.”

He said the most pragmatic and effective approach for the government was to provide money for the community to spend back into the economy while supporting the economy moving forward in relation to skills and training.

© Provided by Sky News Australia