Malcolm Turnbull hails 'win for working families' after Senate approves seven years of tax cuts

Updated

Personal income tax will be cut by $144 billion over the next seven years.

Key points: Income tax will be cut over the next seven years, costing the budget $144 billion in revenue

Labor, the Greens and Tim Storer were the only senators to oppose the Government's plan

High-income earners will get the biggest benefit, with someone on $200,000 getting more than $7,000 a year more in 2025

The Senate has approved the Government's budget promise to progressively cut income tax, with Prime Minister Malcolm Turnbull welcoming it as a "great day".

The bill passed 37 to 33 after an acrimonious debate about whether it helps bankers or battlers.

The 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.

They argue the cuts are unfair because they are too generous to high-income earners.

Labor's Senate leader Penny Wong said two-thirds of the benefit would go to high-income earners.

Mr Turnbull insists it is "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," he 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."

The Prime Minister argued that after the plan is implemented in seven years, those earning more than $200,000 would pay a larger share of personal income tax than they do now.

Hanson denies she will benefit from cuts

Federal Labor has promised to repeal all but the first stage of the tax cuts if it wins the next election.

That makes the personal income tax debate a major issue for the looming by-elections and for the next federal poll.

One Nation senator Pauline Hanson yesterday told the Senate she would not benefit from the tax cuts.

Labor and the Greens accused her of misleading Parliament because a senator on her salary would get more than $7,000 a year when the plan is implemented.

Senator Hanson refused to apologise and defended her statement, saying she did not know if she would still be getting a senator's salary in seven years' time.

"I might be a self-funded retiree at that time, I am not going to speculate that I am still going to be here," Senator Hanson said.

"I am not going to take it for granted that I am still going to be here in this Parliament."

Centre Alliance senator Stirling Griff and his colleague Rex Patrick both voted for the plan despite saying they disagree with the third stage which delivers a tax cut of $7,225 a year for a person on $200,000 from 2024-25 while someone on $30,000 would get a tax cut of $200 a year.

Senator Griff said he and Senator Patrick would be "more than happy to support any moves" Labor made to unravel the third stage if it won the next election.

He also warned that if the economy suffered any setback between now and 2024, then whichever government is in power should reverse the cuts.

He defended backing the plan saying that "in an environment where wages are stagnant and living costs are going up, the majority of people actually want and need a tax cut".

The first stage of the tax cuts is a rebate of up to $530 for the next financial year.

There would also be a change from this July to the 32.5 per cent tax bracket so that about 3 million people would get an extra $135 a year.

In five years' time, the next set of changes would kick in.

The most controversial cut would happen in seven years when the tax system would be flattened so that everyone earning between $41,000 and $200,000 would pay the same rate of tax.

It would mean about 94 per cent of taxpayers would pay 32.5 per cent tax or lower.

Topics: government-and-politics, federal-government, tax, budget, business-economics-and-finance, parliament, australia

First posted