The surprise tax cut will reduce the 16% tax rate to 14% over two years.
The biggest surprise of the workers’ election budget (tax reductions for low-income earners) sailed through the House of Representatives, and is now debated in the Senate.
Treasurer Jim Chalmers introduced the bill on budget night. This will reduce it to 15% next year and 15% and 15% the following year.
As for actual dollar savings, it amounts to $268 in the first year and $536 in the next year.
Estimated to be worth around $17.1 billion over four years, the plan aims to provide relief to taxpayers, and comes when the Labour government risks its lives to win the next election.
In the late afternoon of March 26th, the bill successfully passed the House of Representatives with a vote of 91-55. The Union opposed the plan. However, the next challenge lies in the Senate, with votes expected later that night.
Political fireworks of the house
During a parliamentary debate, Treasurer Chalmers said, “To oppose this law is to get in the way of hard-earned money than staying in the pockets of hardworking Australians.”
He criticized the opposition, saying, “This is something that the opposition was proposing on Brain Snap on Shadow Treasurer last night, and that he would oppose more tax cuts for each Australian taxpayer.”
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Australian treasurer Jim Chalmers will give a budget speech at the Capitol building in Canberra, Australia on March 25th, 2025. Hilary Warduff/Getty Images
Opposition leader Peter Dutton dismissed the plan as a “hoax” and indicated that he would use a budget reply speech on the evening of March 27th to outline the alternative policy.
“We ask Australians to thank them as 70 cents a day will come in 15 months.”
“Now you have heard the Prime Minister say earlier that the mission has been accomplished.
He accused the government of reckless spending, claiming that “this Labour has won $1 trillion in debt…and they are telling Australians that they are a bad family of $50,000 to thank the Albanese Labour Government for its cuts over the past three years.”
Shadow Treasurer’s Angus Taylor breads the scale of the proposed tax cut, suggesting that daily savings will only cover “lollipops… bread rolls for sale… or entry into the jellybean speculation competition.”
“Dulolo without Sololo”: PM
Prime Minister Anthony Albanese described the coalition as “Duroro without a soloro.” The meaning was delusional and lacked practical solutions.
“Today, they have to vote on whether Australians support making more money and keeping more of what they earn. That’s our agenda,” Albanese said.
The Senate is likely to support the bill
The tax cuts for workers appear to pass the Senate.
Sen. Gerald Lennick, a former Liberal Party member, has expressed his support, but he argued that the cuts should be broader and that he insisted on increasing the tax-free threshold from 18,201 to $40,000.
Sen. Jackie Lumby has also pledged her to vote, bringing her closer to ensuring her passing through the government, particularly after Greens leader Adam Band said his party would not block the bill.
Promoting relief for small and medium-sized businesses
Meanwhile, Senator David Pocock has introduced amendments aimed at profiting small businesses by restoring the amortization clause on instant assets.
Pocock urged bipartisan support, “We should pass these measures for Australia’s 2.5 million small businesses, rather than scoring political points.”
He criticized Congress’s inadequate support for small and medium-sized businesses.
The coalition quickly supported his proposal, with Senator Jane Hume saying “I support your efforts to drive this move.”
“Immediate asset amortization is an important feature of the tax system to increase productivity. It has plummeted to record lows under this government and is essential to fostering economic growth in this challenging environment.”
