28 February 2024

Tax cuts for all as Labor's bill passes Senate in late sitting

| Chris Johnson
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Australian Parliament House

The new stage 3 tax cuts passed the Senate in an evening session on Tuesday. Photo: File.

Labor’s stage 3 tax cuts have passed the parliament and will kick in from 1 July.

Late on Tuesday (27 February), the Senate voted for the Federal Government’s changes to legislation the former Coalition government had in place.

Although Opposition Leader Peter Dutton has labelled the move as a broken promise from Anthony Albanese, the Coalition voted with the government nonetheless to pass the tax cuts.

The legislation passed the House of Representatives on 15 February.

A delighted Prime Minister described its subsequent passing in the Senate as a “huge win for all 13.6 million Australian taxpayers” because every one of them will now get a tax cut. However, tax cuts for higher-income earners won’t be as great as they would have been under the Coalition’s legislated cuts.

“It means 84 per cent of Australians will get a bigger tax cut than they would have under the Liberals’ plan,” the Prime Minister said.

“Under Labor, Australians are earning more and they will get to keep more of what they earn.”

“Peter Dutton wants people to work longer for less, and this is a great divide in Australian politics.

“Peter Dutton and the Liberals, of course, when this was announced, first they said they would oppose it. Then they said they would fight it. Then they said they would roll it back.

“Then Peter Dutton called for a federal election on this policy before they voted for it. These tax cuts are aimed squarely at middle Australia, understanding the cost of living pressure that low and middle-income Australians are under.”

Treasury advice to the government is that the changes won’t add to inflation or burden the budget.

The legislation cuts two rates and lifts two thresholds to provide more tax relief to more people and return bracket creep where it has the most impact.

From 1 July this year:

  • The 19 per cent tax rate reduces to 16 per cent (for incomes between $18,200 and $45,000).
  • The 32.5 per cent tax rate reduces to 30 per cent (for incomes between $45,000 and the new $135,000 threshold).
  • The threshold above which the 37 per cent tax rate applies increases from $120,000 to $135,000.
  • The threshold above which the 45 per cent tax rate applies increases from $180,000 to $190,000.

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“Every Australian taxpayer will receive a tax cut this year – not just some,” the PM said.

“Our tax cuts are good for middle Australia, good for women, good for helping with cost-of-living pressures, good for labour supply and good for the economy.

“Labor’s tax cuts are not the beginning of our actions on cost of living and they will not be the end.

“They fit together with everything we are doing to build a stronger economy across the board.”

Finance Minister and Minister for Women Katy Gallagher labelled the vote a great result for women.

She stressed that 100 per cent of women who pay tax will get a tax cut.

“We know that 90 per cent of them will get a bigger tax cut than they would under the former plan,” Senator Gallagher said.

“And we also know that it’s good for participation. So if you want to pick up an extra shift, work a few extra hours, you won’t get penalised because you will be able to keep more of what you earn.

“So from a participation point of view, the Treasury analysis shows that, but also from just getting some more money in your pocket when you’re putting those household budgets together.

“And we know many women across Australia are doing that.”

Original Article published by Chris Johnson on Riotact.

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