Car Loans Australia :: News
SHARE

Share this news item!

Potential Perils of Stage 3 Tax Cuts Unveiled

Potential Perils of Stage 3 Tax Cuts Unveiled

Potential Perils of Stage 3 Tax Cuts Unveiled?w=400
As Australians anticipate padded pocketbooks from Stage 3 tax cuts, emerging concerns involve the risk of increased inflation that could pressure mortgage holders with steeper interest rates, posits an economist.

Dr. Nalini Prasad from the UNSW School of Economics highlights the pivotal role of family spending habits in shaping the future economic scenario.

"Receiving more income is always welcome," Dr. Prasad remarks.

She points out that the average weekly take-home pay will rise by $42.

"If individuals opt to spend the majority of their increased income, it could trigger inflation, placing upward pressure on the cash rate," she explains.

The cash rate, determined by the Reserve Bank of Australia (RBA), acts as a benchmark for mortgage rates across the nation.

The rate currently stands at 4.35 percent, following an assertive rate hike cycle by the RBA aimed at curbing mounting inflation.

RBA Governor Michele Bullock has cautioned that the Board will raise rates further if needed to bring inflation down to the 2-3 percent target range. The latest inflation report from June offers little comfort to homeowners.

The consumer price index surged to 4 percent in the year leading up to May, as reported by the Australian Bureau of Statistics, a hike from April's 3.6 percent inflation.

Economists had forecast a more conservative increase of 3.8 percent.

Deutsche Group chief economist for Australia, Phil O’Donaghoe, believes this unexpected hike will likely prompt the RBA to increase rates by an additional 25 basis points to 4.6 percent in August.

Evaluating Long-Term Outcomes

"Underlying inflation remains excessively high in Australia," asserts O'Donaghoe.

Dr. Prasad emphasizes that the long-range benefits of the tax cuts will hinge on successfully mitigating current inflation issues.

"In the longer run, if the economy can bolster its productive capacity, we could see more investment resulting from the tax cuts. However, tackling short-term inflationary problems is essential first," she notes.

"Without an increase in productive capacity, the immediate effects of the tax cuts may be constrained to heightened inflation, with minimal economic growth gains," she warns.

Some data, however, suggests that the tax cuts might not significantly contribute to inflationary pressures.

For instance, a study by banking giant NAB indicates that over a third of Australians, approximately 36 percent, intend to save their additional income rather than splurging on non-essentials.

The report also reveals that a significant portion of Gen Z Australians, around 53 percent, plan to save rather than spend, and 49 percent of those earning between $100,000 and $150,000 prefer saving to spending.

"Despite the challenges of rising living costs, Australians have been making savings a priority wherever possible over the past year or so," observes Paul Riley, NAB's personal banking executive.

"The funds from Stage 3 tax cuts are expected to significantly boost their savings or rainy-day funds," Riley adds, emphasizing that this tendency to save will assist in combating inflation.

The content of this article has been adapted from an original news piece titled "UNSW Economics Expert Warns of Stage 3 Tax Cut Inflation Risks," published by NewsWire.

Published:Thursday, 11th Jul 2024
Source: Paige Estritori

Share this news item:

Finance News

RBA Proposes Ban on Card Payment Surcharges RBA Proposes Ban on Card Payment Surcharges
15 Jul 2025: Paige Estritori

The Reserve Bank of Australia (RBA) has proposed eliminating surcharges on debit and credit card transactions, a move that impacts all major card providers such as Mastercard, Visa, and eftpos. As revealed in a newly released consultation paper, the RBA cites the $1.2 billion annual cost to consumers, highlighting inefficiencies and advocating for a unified approach to card payments. - read more
Future2 Foundation Seeks Nominations for Financial Wellbeing Grants Future2 Foundation Seeks Nominations for Financial Wellbeing Grants
15 Jul 2025: Paige Estritori

The Future2 Foundation has opened nominations for its annual Make the Difference Grants, providing financial support to initiatives that enhance financial wellbeing across Australia. Financial services professionals have until August 21 to nominate local projects aimed at improving financial literacy, assisting those in poverty, supporting disadvantaged women, and benefiting regional and remote communities. - read more
Increasing Number of Qualified Financial Advisers Opt Out of Practice Increasing Number of Qualified Financial Advisers Opt Out of Practice
11 Jul 2025: Paige Estritori

Recent analysis from WealthData indicates a growing trend among financial advisers in Australia, where a significant portion of those who have successfully passed the financial adviser exam are opting not to practice. As of now, 5,096 individuals, representing 33.31% of active advisers, have chosen not to proceed into practice after passing the exam—up from 28.36% a year prior. - read more
Melbourne's Housing Market: A Prime Opportunity For Buyers Melbourne's Housing Market: A Prime Opportunity For Buyers
11 Jul 2025: Paige Estritori

The Reserve Bank of Australia (RBA) recently surprised many by maintaining the interest rate at 3.85%, against expectations of a cut. This decision is seen as a measure to continue moderating inflation, but it simultaneously delays potential spikes in the housing market, providing a favorable window for prospective homebuyers. In particular, Melbourne's current market presents significant value, offering a promising opportunity for those looking to enter the property market. - read more
Improving EOFY Planning: The Call for ATO Portal Access for Advisers Improving EOFY Planning: The Call for ATO Portal Access for Advisers
09 Jul 2025: Paige Estritori

In a recent discussion, James O'Reilly, Director and Financial Planner at Northeast Wealth, underscored the benefits that could come from granting financial advisers access to the Australian Taxation Office (ATO) portal. Speaking on The ifa Show, O'Reilly proposed that this access would significantly simplify the services financial advisers provide to clients, particularly at tax time and the end of the financial year (EOFY). - read more


Car Loans Articles

5 Strategies for Balancing Your Budget with a New Car Loan 5 Strategies for Balancing Your Budget with a New Car Loan
With the excitement of purchasing a new vehicle, the financial responsibilities that come with a new car loan can often be overlooked. Balancing your budget when you have taken on a new car loan is crucial to financial well-being and long-term happiness with your purchase. In this article, we will explore five practical strategies that can help you navigate the common financial challenges that accompany car loans. - read more
How to Create a Flexible Budget for Your Next Car Purchase How to Create a Flexible Budget for Your Next Car Purchase
When it comes to buying a car, particularly a used one, having a flexible budget is essential. Flexible budgeting allows you to adjust your spending plan according to your current financial situation and any unexpected changes that might occur. This adaptability is crucial in managing your finances effectively and ensuring you make a purchase that won't strain your resources. - read more
Top Tips for Australians Navigating the Online Car Market Top Tips for Australians Navigating the Online Car Market
The Australian automotive landscape has witnessed a significant transformation with the rise of online car sales. The concept of browsing, selecting, and purchasing a vehicle through digital platforms has gained immense popularity, offering consumers a vast array of choices at their fingertips. - read more
The Role of Loan Terms in Car Buying: Flexibility Explained The Role of Loan Terms in Car Buying: Flexibility Explained
When it comes to buying a car, understanding the loan terms is just as essential as choosing the right make and model. The terms of a loan can significantly affect your financial journey beyond just the asking price. In a marketplace brimming with attractive deals, comprehending these terms can be your greatest asset, ensuring you drive away with a well-suited financing plan. - read more
The Essential Guide to Securing Affordable Car Finance in Australia The Essential Guide to Securing Affordable Car Finance in Australia
Finding an affordable car finance option can make the dream of owning a vehicle a tangible reality for many Australians. It’s about understanding the intricacies of the loan market, interest rates, and finding a plan that aligns with your financial prospects and constraints. In a society built on the convenience of mobility, securing a car that meets both your needs and your budget is essential. - read more
Car Loans: Secured vs Unsecured Car Loans: Secured vs Unsecured
Car loans play a pivotal role in empowering individuals to afford their own vehicle, which can be a significant purchase. These loans, structured to fit within one's financial situation, can ease the burden of acquiring a car and assist in achieving personal convenience and mobility. - read more
Fixed vs. Variable Interest Rates: Which Car Loan is Right for You? Fixed vs. Variable Interest Rates: Which Car Loan is Right for You?
Purchasing a car is a major financial decision for many Australians, and it often involves securing a loan. With numerous options available, navigating the car loan landscape can be overwhelming. Understanding your choices is essential for finding the loan that best suits your needs. - read more
Avoid the Pitfalls: Common Mistakes to Avoid When Seeking Car Finance Avoid the Pitfalls: Common Mistakes to Avoid When Seeking Car Finance
Entering the world of car finance can be both an exciting and daunting venture. With a plethora of options for car loans in Australia, it is essential for potential buyers to arm themselves with knowledge to make the best financial decision. A well-informed choice can be the difference between a loan that propels your personal mobility, and one that hinders your financial stability. - read more
From Fuel to Finance: A Comprehensive Breakdown of Car Costs From Fuel to Finance: A Comprehensive Breakdown of Car Costs
When it comes to owning a car in Australia, many of us view it as a symbol of freedom, an essential convenience, or even a reflection of our personal style. Yet, for all the road trips planned and errands run, the cost of owning a car extends well beyond the sticker price. - read more
The Pros and Cons of Car Loans for Used Vehicles in Australia The Pros and Cons of Car Loans for Used Vehicles in Australia
With the rising cost of living, many Australians are opting for used vehicles as a cost-effective alternative to brand-new cars. Buying a used car can offer significant savings, reducing the initial financial burden while still providing reliable transportation. - read more


Need Help Finding a Loan?
Get a free car loan eligibility assessment and compare offers tailored specifically to your circumstances.
Loan Amount:
Postcode:
All finance quotes are provided free (via our secure server) and without obligation.
We respect your privacy.

Knowledgebase
Principal:
The original sum of money invested or lent, on which basis interest and returns are calculated.