Government's $158b tax cuts pass Parliament, giving Coalition first win since election

Updated

Bulked-up tax returns will start flowing as soon as next week after the Coalition's much touted $158 billion income tax plan passed Parliament.

Key points: Labor, Centre Alliance and Jacqui Lambie all voted with the Coalition to pass the full tax package

The Greens were the only senators to vote against it, with One Nation abstaining and Cory Bernardi absent

The result prompted claps from Coalition senators and heckles of "shame" from the Greens

Crossbenchers Jacqui Lambie and Centre Alliance offered the final crucial votes the Federal Government needed to pass the legislation, which retrospectively offers tax cuts for the last financial year.

Labor ultimately supported the passage of the plan in the Senate, after its proposed amendments failed.

The legislation passed 56 to 9, with One Nation abstaining, the Greens voting against the bill, and crossbencher Cory Bernardi absent.

The result prompted claps from Coalition senators and heckles of "shame" from the Greens.

The change means more than 10 million Australians will receive a tax cut up to $1,080.

Prime Minister Scott Morrison said he was pleased the Parliament had endorsed the plan the electorate gave him a mandate to deliver.

"This is a win tonight, not for the Government, not for Liberal and National parties, this is a win for those hardworking Australians quietly going about their lives," he said.

Income Tax cut from 2018-19 Tax cut from 2022-23 Tax cut from 2024-25 $30,000 $255 per year $255 per year $255 per year $60,000 $1,080 per year $1,080 per year $1,455 per year $90,000 $1,215 per year $1,215 per year $2,340 per year $120,000 $315 per year $2,565 per year $4,440 per year $150,000 $135 per year $2,565 per year $6,540 per year $180,000 $135 per year $2,565 per year $8,640 per year

The legislation will now head to the Governor-General for royal assent, paving the way for the Australian Tax Office (ATO) to begin applying it to tax returns for the last financial year.

Senator Lambie had held out offering her support until early Thursday morning.

She wanted more money for social housing in Tasmania and said she was willing to support the tax cuts "in good faith".

She wanted more money for social housing in Tasmania and said she was willing to support the tax cuts "in good faith", under the expectation the Government would meet her demands in the next six weeks.

"I'm not saying everything about this bill is perfect and I'm not saying that it's going to fix every problem people are experiencing," Senator Lambie said.

"I'm just saying that if you ask me to choose between helping someone and helping nobody then I know what I'm going to choose every single time, just as sure as day follows night."

The Government has repeatedly refused to comment on the details of the agreement reached with Senator Lambie or Centre Alliance.

Labor fails to amend the Coalition's plans

Labor wanted to amend the bill, to bring forward the second stage and delay the third stage, which includes longer-term structural changes, for future consideration.

The Opposition's leader in the Senate, Penny Wong, led the charge to amend the legislation, but Labor ultimately failed when it was unable to convince enough crossbenchers to support its measures.

She argued the Coalition did not have a mandate to deliver tax cuts that would be rolled out after future elections.

"What we're actually arguing about is stage three [and] what happens in five years' time," Senator Wong said.

"We think it is irresponsible to sign up to $95 billion worth of expenditure five years before they start with absolutely no means to pay for them."

Labor ultimately voted for the full package the Coalition had put forward.

"Because every Australian, apparently apart from some members of the Government, knows that the economy's struggling and that the economy does need stimulus," Labor leader Anthony Albanese said.

But it left the door open to repealing the third stage of the legislation, with Finance Minister Jim Chalmers saying the party would review it closer to the next election.

"We'll take into account all of the fiscal conditions, all of the economic conditions ... and we'll come up with the right and responsible policy for the future," he said.

Meanwhile, Mr Morrison said repealing even part of the package would seriously damage the economy.

"If they haven't got the message by now that higher taxes kill aspiration in this country, they never will.

"You can't trust Labor when it comes to taking money from you. They will always want more."

The Prime Minister thanked Finance Minister Mathias Cormann for "bringing it home" and criticised Labor for trying to amend the package.

"I'm just so pleased that the Senate tonight kept faith with the verdict of the Australian people at the last election," Senator Cormann said.

He said the tax cuts represented the best chance for Australians "to get ahead" in a strengthening economy.

But the tax package will only go some way towards stimulating the economy the Reserve Bank of Australia (RBA) is keen for the Government to do.

RBA governor Philip Lowe has warned that without further Government intervention, the RBA will not be able to boost wages alone.

Greens alone in voting against the tax package

Throughout the parliamentary debate, the Greens savaged the Coalition for what it dubbed irresponsible economic management.

"What a dark, dark day in Australian politics," Greens leader Richard Di Natale said.

"There is nothing responsible about ripping $90 billion from our budget and lining the pockets of the wealthiest Australians," Senator Di Natale said.

He then turned his attention to Labor, accusing the Opposition of failing to do its job.

"Show some courage, toughen up, be an Opposition, take the fight up to them," he said.

"There are so many Australians in this country who are crying out for leadership and you've caved, you've crumbled, you've given in at the first sign of pressure.

"People held high hopes for Anthony Albanese and if this is sign of where the modern Labor party are going, well, frankly, we are stuffed."

Outside Parliament, Labor Senator Pat Dodson brushed off the Greens' remarks.

"Oh look, that's the Greens position. I think when you can count, you can count.

"When you know you haven't got the numbers you know you've got to find a way out of there."

Topics: government-and-politics, tax, australia

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