The Senate has now successfully passed income tax reform that will cut income taxes by $144 billion AUD over the next 7 years.
The bill passed despite Labor rejecting the majority of the plan and refusing to vote in favour of it, along with the Greens and independent Senator Tim Storer.
Prime Minister Malcolm Turnbull described it as “a great day”, as the Senate passed the budget promise to cut income tax progressively over the next 7 years. The bill passed with 37 in favour and 33 against.
Both senators from One Nation, both from the Centre Alliance, Cory Bernardi, Brian Burston, David Leyonhjelm, Fraser Anning and Derryn Hinch all helped the Government push the bill over the line.
The bill’s detractors argue that the tax cuts are grossly unfair as they primarily reward higher-income Australians rather than the working class.
Labor Senate leader Penny Wong argued that two-thirds of the tax cut benefit would end up in the pockets of the richest Australians. Despite these statements, Mr Turnbull has insisted that the tax plan is “thoroughly fair”.
Mr Turnbull went on to say that it was a “massive win” for working class Australians and that families would get to “keep more of the money they earn”.
He also said that the Government shouldn’t take in any more revenue in tax than is necessary to “deliver the essential services” that Australians depend on.
Mr Turnbull went on to argue that after the plan is put in place 7 years from now that Australians earning more than $200,000 annually would end up paying a larger share of income tax than what they do currently.
The Federal Labor Opposition has promised that it would redact all except the first stage of cut if they were able to win the next election. This likely means that a debate on the fairness of personal income tax cuts will be a major voting issue in upcoming by elections and federal polls.
One Nation’s Pauline Hanson told the Senate that she would not get any financial benefit from the tax cuts. She was accused of misleading Parliament by both Labor and the Greens who said that she would get over $7000 in tax savings when the plan is fully implemented.
Senator Hanson has since doubled down on her statement and refused to apologise citing that she did not know if she would still be on her senator’s salary by the time the plan takes effect. She said that she “might be a self-funded retiree” and refused to speculate about whether or not she would still be in the Senate.
The most controversial aspect of the tax plan will occur at the end of the 7 year period, with Australians earning between $44,000 and $200,000 paying the same flat rate of tax.