Workers will get hundreds of dollars back in their pockets at tax time next year after Malcolm Turnbull’s full income tax cuts passed the Senate with the help of the crossbench.
But people on big wages are the big winners – they will get thousands of dollars back every year once another round of cuts take effect in 2024.
Labor has pledged to repeal the final stage of the plan if it wins government at an election due by May 2019.
The $144 billion tax package got through the Senate by 37 votes to 33 on Thursday, despite objections from Labor and the Greens.
There is wide support for cutting taxes on people earning up to $90,000 a year. But Labor opposes the package’s third stage, which benefits people earning up to $200,000 from 2024.
Treasurer Scott Morrison told parliament step three simplified and flattened the tax system by abolishing the 37 per cent tax bracket entirely, reducing the number of tax brackets from three to four.
“The plan is a package that gives certainty to Australian families that they will keep more of what they earn in the future,” he said.
Manager of Opposition Business Tony Burke said the government was trying to gag debate on the legislation.
“When you outsource your economic policy to Pauline Hanson, careful what you wish for,” Mr Burke said.
The One Nation leader confirmed on Thursday morning her two-senator team would support the government’s full seven-year plan.
Senator Hanson conceded it was a gamble to support the entire package, having previously argued the third and final stage was unaffordable but said she was now more optimistic.
“I’ve actually now decided to support the government in the tax cuts, which the Australian people need,” Senator Hanson said.
“It was the only fair thing to do.”
With Centre Alliance’s two senators also supporting the full package, the coalition had the eight Senate crossbench votes needed to pass it.
In the Senate, Labor and the Greens voiced their anger about the way in which the government had shut down debate.
Labor’s Penny Wong said it was all about the coalition’s “political timetable”, ahead of five by-elections on July 28, rather than sound policy or fairness.
Recent polls have shown a majority of voters disagree with the tax cut for the most wealthy but support the first two parts of the package.
Labor frontbencher Doug Cameron tore shreds off One Nation for siding with the government.
“This decision by Pauline Hanson to support some of the highest-income earners in the country just demonstrates how out of touch Pauline Hanson is,” he said.
Under the first of three stages in the plan, low- and middle-income earners will get tax relief of up to $530 a year from July 1.
Independent Senator Tim Storer issued a scathing attack on the Centre Alliance party, formerly the Nick Xenophon Team, of which he was once a member.
He said the minor party’s two senators had sided with the government to guillotine debate, soon after voting to scrap the package’s final stage.
“Today, Centre Alliance turned its back on the principles central to Nick Xenophon and the party he started,” Senator Storer said.