Fiscal Neutrality

Fiscal neutrality is when the wind of government taxes and the opposing wind of government spending cancel each other out, having a neutral (no) effect on consumer demand.

When tax revenue equals government spending...a.k.a. a balanced budget...the government is practicing fiscal neutrality. Some economists believe fiscal neutrality is preferable to affecting consumers behavior via taxes, since taxes can have a distorting effect on the market.

When the government is trying to increase aggregate consumer demand (like with a stimulus), or decrease aggregate consumer demand (like by increasing taxes), it is then taking an actively non-neutral fiscal stance.