Australian Stage-Three Tax Cuts Resembles Britain’s Absurd Trickle-Down Budget

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Anthony Albanese, Australian Prime Minister, should learn extensively from Uk’s current economic challenges.

Liz Truss, the British prime minister, talked to the UN general assembly last week about the virtues of trickle-down economics and told reporters that “there is no doubt in my mind that lower taxes lead to economic growth.”

The problems faced by the UK government act as a warning to Australia, as both countries have similar tax cuts. Many people in Britain are already feeling the impact of the UK mini-budget. It is a set of economic rules and policies that involves the abolition of the 45% additional income tax rate.

Trickle-down economics is believed to be infeasible since cutting taxes for the rich is not correlated to increased consumer spending, government revenues, and higher employment.

If we compare the said mini-budget to Australia’s stage-three tax cuts, the latter is way worse. The UK tax cuts will deliver around 67% to 20% wealthiest people, yet Australia’s will provide 75% of the benefits to them.

The investors were disappointed in the Truss government after believing that high-end tax cuts would pose a lot of beneficial output during a recession. Consequently, the value of the pound went spiralling down. The UK government seems to be self-sabotage on its tax base.

Deficit budget spending is meant to go to the people in need through services such as medical care, child care, education, and infrastructure. However, high-end tax cuts fail to provide improvement to society. 

Yet, you will still hear conservatives justifying that tax cuts are suitable for the economy. But the point is, it should not be done during an economic turmoil. It is like putting salt in a wound. 

Like the UK, Australia faces decreasing currency values due to higher US Dollar power from high-interest rates. As a result, goods, services, and imports become more expensive.

As Greg Jericho, guardian columnist and policy director at the Centre of Future Work, said, “Stage 3 tax cuts were always the worst policy, but now is being done at the worst time.”

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