Tax cuts on luxury goods boost spending during economic downturns
Consumption tax cuts can help boost the economy during recessions. By lowering taxes on things like everyday items and big purchases, people tend to spend more. The impact is stronger on durable goods like cars and electronics, especially for wealthier and younger households. In less severe recessions, the effect is more noticeable. This shows that cutting consumption taxes can be an effective way to stimulate the economy when times are tough.