High-income earners will pay more tax after parliament approved the coalition government’s first budget measure.
The temporary budget repair levy increases the top income tax rate, which applies to any income earned over $180,000, from 45 per cent to 47 per cent from July 1.
It aims to collect an extra $3.2 billion over three years.
Rebel Liberal senators Ian Macdonald and Cory Bernardi, who opposed the measure, were not required to take a formal position because the legislation passed the upper house on the voices on Tuesday.
Senator Macdonald earlier said he was prepared to cross the floor on the tax, and it should be extended to corporations, especially foreign shareholders.
Finance Minister Mathias Cormann tried to allay Senator Macdonald’s concerns, warning an increased company tax would inhibit economic growth.
During a back-and-forth exchange, Senator Macdonald said the government’s arguments make no sense particularly in light of the planned paid parental leave scheme.
Senator Bernardi said he opposed the bill but wouldn’t go so far as to cross the floor.
The opposition says the dissenting senators are evidence of cracks in the government’s unity.
Labor’s support guaranteed the tax’s future but Labor senators voiced concerns about loopholes meaning only the “wealthy but poorly advised” pay the tax.
The Greens say the measure is a smokescreen to help the government sell the rest of its controversial budget and tried unsuccessfully to amend the tax to make it permanent.