The Senate has approved the Government’s budget promise to cut income tax by $144 billion over the next 7 years.
Following a caustic debate in the chamber over whether the winners were the wealthy or the battlers, it passed 37 to 33.
Two One Nation senators, the two from Centre Alliance, David Leyonhjelm, Cory Bernardi, Brian Burston, Derryn Hinch and Fraser Anning all voted for the Government’s plan. Labor, the Greens and independent Tim Storer voted against the tax package.
Under the changes, there will be a tax cut of $7225 a year for a person on $200,000 from 2024-25 while people earning $30,000 would get a tax cut of $200 a year.
The first stage of the tax cuts will see a rebate of up to $530 for the next financial year.
Another change from this July to the 32.5 per cent tax bracket will see about 3 million people getting an extra $135 a year.
The most controversial change will be in seven years’ time when the tax system will be flattened.
This will see everyone earning between $41,000 and $200,000 paying the same rate of tax and means about 94 per cent of taxpayers would pay 32.5 per cent tax or lower, regardless of how much they earn.
Federal Labor has promised to repeal all but the first stage of the tax cuts if it wins the next election, making tax a key issue in the looming by-elections and for the next federal election
Labor’s Senate leader Penny Wong said two-thirds of the benefit would go to high-income earners but the Prime Minister Malcolm Turnbull said the package was “thoroughly fair”.
“Today we have seen a massive win for hard-working Australian families. They will be able to keep more of the money they earn,” Mr Turnbull said in Question Time.
“It is their money. They earned it.
“And we should take no more of it than the Government needs to deliver the essential services Australians rely on.”