Australia’s prime minister achieved an important political victory on Thursday when the Senate passed personal income tax cuts worth 144 billion Australian dollars ($106 billion) over a decade.
The tax cuts for most of Australia’s workforce were a centerpiece of Prime Minister Malcolm Turnbull’s annual budget plans revealed in May. That budget is expected to be the last before Turnbull’s conservative coalition seeks another three-year term at elections due by early next year.
The center-left opposition Labor Party supported the proposed initial tax relief for low- and middle-income earners beginning next month. But it opposed a third and a final stage of the plan that reduces taxes of those with incomes from AU$120,000 to AU$200,000 beginning in mid-2024.
Turnbull on Wednesday refused to split the legislation so that the Senate could reduce taxes for those on lower incomes but not for higher-income earners. The Senate had to pass or reject the changes in their entirety.
The Senate on Thursday chose to endorse the entire package, 37-33. The government holds only 31 of the 76 seats in the Senate. Minor parties provided the majority the legislation needed, with Labor senators voting against it.
Labor’s leader in the Senate, Penny Wong, accused senators who supported the package of voting for a tax cut for themselves. A senator’s base pay is around AU$200,000.
Opposition leader Bill Shorten this week vowed to repeal the tax changes for higher-income earners if Labor wins power at the next election. But that might not be possible since governments rarely win majorities in the Senate.
Shorten will also go to the election promising bigger tax breaks for modest incomes than Turnbull delivered.
The Senate win will bolster Turnbull’s hopes of passing corporate tax cuts through Parliament next week.