But people on big wages are the big winners – they will get thousands of dollars back every year once another round of cuts takes effect in 2024.
Labor’s 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 with almost all of the crossbench supporting it despite objections from Labor and the Greens.
There was wide support for cutting taxes on people earning up to $90,000 a year, but Labor opposed 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 four to three.
“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.
Labor tried to remove the third stage but the government refused to back down.
Manager of Opposition Business Tony Burke said the government gagged debate on the legislation to force it through.
“When you outsource your economic policy to Pauline Hanson, careful what you wish for,” Burke said.
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 told reporters before the vote.
“It was the only fair thing to do.”
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.
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 was the only crossbencher to vote against the bill.
He issued a scathing attack on the Centre Alliance party, formerly the Nick Xenophon Team, of which he was once a member, for voting with the government.
“Today, Centre Alliance turned its back on the principles central to Nick Xenophon and the party he started,” Storer said.
The Australian Council of Social Service also criticised the tax cuts, saying people will miss out because the budget won’t be able to fund necessary services.
“The tax cut package is gambling the future of our medical services, aged care services, disability services, and social security payments most of us rely upon at some stage in our lives,” chief executive Cassandra Goldie said today.
“Essential services will lose funding because tax cuts have to be paid for.”
Goldie said no one could know what the economic situation would look like in 2024 when the biggest round of tax cuts go through.
“Are we fortune tellers? No, and none us know what will happen to the economy and the budget that far ahead,” she said.
“We got into trouble last time a full income tax package was passed in advance.
“The GFC meant our budget was in the red for a very long time and our essential services suffered as a result.”
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