The tax cuts were supposed to put more money back in the pockets of Australians and encourage them to spend, and therefore kickstart the economy. By mid-November last year, many Aussies had received their tax refunds.
However, a new survey has revealed that nearly all (95 per cent) didn’t spend their tax refunds at the shops.
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According to a study of 1,006 Australians, a third saved their tax refunds, more than a quarter used it to pay off bills they already had, and nearly one in ten bought essential items such as groceries and household repairs.
In July last year, Frydenberg said it wasn’t up to the government to tell Australians how to spend their money.
“It's for them, their families, for the individuals involved, to determine their priorities," the federal treasurer said at the time.
“I'm very confident this money will be used to ensure greater economic activity. It will be used at the local shop. It will be supporting local employers and local businesses.
“There are a number of things that are happening together with these tax cuts that will continue to see strong economic activity across the Australian economy.”
But that’s not what’s happened, this survey has shown.
According to financial adviser and Money.com.au spokesperson Helen Baker, Australians are feeling the pinch from stagnant wage growth as well as the rising cost of living.
“In previous years, people would spend their tax return on retail and leisure, but the findings reveal that the majority of us are struggling and are anticipating that the hard times will continue,” she said.
“As such, the tax refunds are simply helping us to get by now – help us to catch up where we were behind, or help us in the future.”
Study findings showed that under-30s and those in their 50s save more than any other age group, with younger Aussies are likely saving up for a home deposit and those in their 50s thinking about retirement.
Those struggling with expenses can find themselves caught up in a cycle of debt, said Baker.
“To reduce your interest payments in the short term, you could consider whether consolidating your debts into one loan or transferring your credit card debt onto a zero per cent balance transfer card is appropriate for you,” she said.
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