When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use ine¢ cient policies such as wasteful public spending or future commitments to in ‡ate. We conclude that in the New Keynesian model, the zero bound on nominal interest rates is not a relevant constraint on both ...scal and monetary policy.