GST take is down, interest rates likely to follow
Are you paying your GST? I certainly am!
Despite this, a slowdown in GST revenue as shoppers shut their wallets is giving fresh impetus to the Reserve Bank to drive ahead with cuts to official interest rates, while forcing the Morrison government to rely on workers and their superannuation to repair the budget.
A breakdown of Finance Department budget figures reveals GST revenue, a barometer for the health of consumers, is running behind the government’s most recent forecasts in a development that will also hit the bottom line of every state and territory.
Our share market has rallied in the past week with many sectors aided by the status quo being maintained on income tax, capital gains tax, franking credits and negative gearing following the Coalition’s shock election win.
However, trade tensions between the US and China remain frosty as China has denounced comments from US Secretary of State Mike Pompeo, confirming there is no connection between Huawei CEO and Beijing.
While the escalating war of words was calmed by comments from President Trump late Friday that suggest Huawei could be included in a trade deal, the deterioration in trade relations throughout the last fortnight has hampered demand for the AUD.
That said, we have seen a shift in haven demand for the USD through the last 48 hours. Market expectations the trade war would prove USD positive as a haven asset have wavered as analysts look to broader capex indicators and increased expectations for protectionism as markers for a Fed Rate Cut.