Senate passes sweeping income tax cut plan
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 over the next seven years.
It 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.
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.
The plan means a tax cut of $7,225 a year for a person on $200,000 from 2024-25.
Someone earning $30,000 would get a tax cut of $200 a year.
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, australia
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