A lot has been made of the recent ABS retail figures for July. There’s no denying that the results – which included a drop in turnover of 0.1 per cent – were underwhelming to say the least.
On top of this, the fact that the Federal Government’s tax cuts came into effect that month has led some to fear the worst. Certainly, we were all hopeful that July would have seen a surge in sales following the legislated tax relief for low and middle-income earners combined with the cut in interest rates.
However, analysis released last week from global bank UBS argues that the positive impact of the tax reductions is yet to come. The UBS report forecast economic growth to double in the September quarter as a direct result of the $7.8 billion in tax relief that came into effect in July.
Regarding retail specifically, the report predicts the tax cuts to boost retail and lead to a jump in GDP of 0.8 per cent in the September quarter and a further 0.6 per cent rise in the December quarter. According to UBS, roughly half of all tax refunds are forecast to be spent on retail sales alone which, if true, would be very welcome news for retailers across the country. Retail is also set to see a 1 per cent boost in sales in the 2020 financial year as a direct result of the reduction in income taxes alone.
Now all this economic jargon means nothing unless each of you start to see an improvement in your bottom line. The point is that there’s strong indications that the benefits from the tax cuts should start to be flowing through (if they haven’t already) for your business between now and the end of the year.
All the best for the week ahead!