Labor’s Tax Cuts Pass Lower House, Now Set for Senate Debate

The surprise tax cut lowers the 16 percent tax rate to 14 percent in two years.

Australian Parliament House is seen behind a ‘Pay Here’ sign at a parking pay station in Canberra, Australia on March 21, 2025. AAP Image/Lukas Coch

The biggest surprise in Labor’s election budget—tax cuts for low income earners—has sailed through the House of Representatives and will now be debated in the Senate.

Treasurer Jim Chalmers introduced the bill during budget night, which will lower the 16 percent tax rate (for those earning $18,201 and $45,000), to 15 percent next year and 14 percent the year after.

In terms of actual dollar savings, that equates to $268 in the first year, and $536 in the next.

The plan, estimated to be worth about $17.1 billion over four years, is aimed at providing relief for taxpayers, and comes as the Labor government vies to win the next election.

By late afternoon on March 26, the bill successfully passed through the House of Representatives with a vote of 91 to 55—the Coalition opposed the plan. However, the next challenge lies in the Senate, where a vote is expected later that evening.

Political Fireworks in the House

During parliamentary debate, Treasurer Chalmers stood by the proposal, stating, “To vote against this legislation would be to stand in the way of more hard-earned money staying in the pockets of every hard-working Australian.”

He criticised the opposition’s stance, adding, “This is what those opposite are proposing with the shadow treasurer’s brain snap last night when he said that he would oppose more tax cuts for every Australian taxpayer.”

Australia’s Treasurer Jim Chalmers delivers his budget speech at Parliament House in Canberra, Australia on March 25, 2025. Hilary Wardhaugh/Getty Images

Opposition Leader Peter Dutton, in turn, dismissed the plan as a “hoax” and indicated that he will use his budget reply speech on March 27 evening to outline an alternative policy

“You are asking Australians to be thankful because 70 cents a day is coming in 15 months’ time.”

“Now, you heard the prime minister earlier say that ’mission accomplished,' the job is done, and Australians should be thankful for everything they’ve got.”

He accused the government of reckless spending, claiming, “This Labor Party has racked up a trillion dollars of debt … and they’re saying to Australians, an average family who is $50,000 worse off under the last three years of the Albanese Labor government to be grateful for the cuts.”

Shadow Treasurer Angus Taylor panned the scale of the proposed tax cut, suggesting the daily savings would only cover “a lollipop… a bread roll if it’s on sale … or an entry into a jelly bean guessing competition.”

‘Dulolo with No Sololo’: PM

Prime Minister Anthony Albanese described the Coalition as “dulolo with no sololo,” meaning were delusional and lacked practical solutions.

“Today they will have to vote on whether they support Australians earning more and keeping more of what they earn, which is what our agenda is,” Albanese said.

Senate Likely to Back the Bill

Labor’s tax cuts appear like to pass the Senate.

Former Liberal Party member, Senator Gerard Rennick, has expressed his support, though he argued the cuts should have been more extensive, advocating for raising the tax-free threshold from $18,201 to $40,000.

Senator Jacqui Lambie has also pledged her vote, bringing the government closer to securing passage, particularly after Greens leader Adam Bandt stated his party would not block the bill.

Push for Small Business Relief

Meanwhile, Senator David Pocock introduced an amendment aimed at benefiting small businesses by reinstating the instant asset write-off provision.

Seeking bipartisan support, Pocock urged, “Rather than scoring political points, let’s pass these measures for Australia’s 2.5 million small businesses.”

He criticised parliament’s insufficient support for small enterprises.

The Coalition swiftly backed his proposal, with Senator Jane Hume stating, “The Coalition will support your effort to move this motion.”

“The instant asset write-off is a critical feature of our taxation system to boost productivity—productivity that has plunged to record lows under this government and is essential for driving economic growth in this challenging environment.”