The Government's plan to overhaul income tax plan has been passed in full, 37 votes to 33. It means that billions of dollars of income tax cuts will flow over the next seven years.
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.
Full income tax cuts pass with Pauline Hanson’s crucial votes
Malcolm Turnbull’s full suite of income tax cuts have passed the Senate, delivering one of the Coalition’s key economic policies in time for July 1
The Turnbull government’s full set of income tax cuts have passed the Senate, with the support of One Nation and the Centre Alliance.
The landmark tax reform was the centerpiece of the government's 2018 Budget, and will form a key part of its pitch to voters in the leadup to the next federal election.
The first round of tax cuts will take effect on July 1, but taxpayers will not see the money until they lodge their tax returns at the end of the next financial year.
The two minor parties gave the Coalition the final votes needed for the bill to pass - although the Centre Alliance said it would help a future government undo some of the long-term tax cuts included in the plan.
The package includes immediate tax cuts for low- and middle-income earners this year, kicking in on July 1, as well as future rounds of cuts in 2022 and 2024 that mostly benefit higher earners. All up, the cuts will cost the treasury $144 billion over the first seven years.
“After strong consideration with it I've actually now decided to support the government in the tax cuts, which the Australian people need,” Pauline Hanson told reporters outside Parliament House on Thursday morning.
Senator Hanson had previously shared the concerns of Labor, Tim Storer and the Centre Alliance about the cost of stage three – the 2024 cut that would remove an entire tax bracket so those earning between $41,000 and $200,000 are taxed at the same marginal rate.
But One Nation will now support the full plan.
"We've had meetings with the Labor Party over the whole tax thing. It was a real concern with me, with Stage 3, about the black hole and paying down debt," Senator Hanson said.
But she said she hoped the government would succeed in getting the budget back into surplus by the time the later stages kicked in.
One Nation has also secured 1,000 government-supported apprenticeship places in exchange for its support - reviving an old deal the party made over the separate company tax cuts.
"I will be pleased if I can get that," Senator Hanson said.
The tax cuts were dealt a blow on Wednesday when the Senate voted to split the bill by stripping away the 2024 cuts.
But the Turnbull government immediately pledged to reattempt the bill in full and is expected to trigger another vote on Thursday.
One Nation’s support is not enough to guarantee the passage of the bill.
The Coalition can count on the outspoken independent Derryn Hinch, who pledged support with “no strings attached”. The “loose alliance” of independent conservatives – senators Leyonhjelm, Bernardi and Anning – will also vote with the government.
Ex-One Nation senator Brian Burston, now in Clive Palmer’s new party, will also support the full package.
But the government will need at least one of the Centre Alliance senators – Stirling Griff and Rex Patrick – to secure the bill.
Centre Alliance does not support the 2024 cuts but have signalled they may be willing to vote in favour of the bill, knowing a future government will have plenty of time to undo them before they take effect.
Senator Patrick said Centre Alliance was "reserving" its final decision, but would side with the government in an all-or-nothing decision.
"We're open to supporting the full package if it comes back in that form," Senator Patrick said.
"But we never know what Pauline will do and that's kind of a good thing, we're hoping the government may just accept that stage 1 and 2 is an assured thing and run with that."
"The dilemma for us is, if we reject it then low- and middle-income earners who deserve a relief [won't get a tax cut]."
