The Turnbull government is now 24 hours away from securing its $143bn personal income tax cut package after the Senate passed an amended version of the package on Wednesday night.
The victory looms despite the Senate successfully stripping out the tax relief for higher income earners due to start in 2024.
The legislation will return to the House of Representatives on Thursday morning, where the Senate’s amendments will be rejected, and it will return to the Senate and be passed with a minimum of debate.
It will be passed in its original form because the Centre Alliance bloc of two senators will not insist on amendments they secured on Wednesday.
The procedural skirmishes on Wednesday flushed out Pauline Hanson, who lined up with the government to support the stage three tax cuts for higher income earners, which was the final piece of the puzzle for the Turnbull government.
During chamber debate, Labor, the Greens, the South Australian independent Tim Storer and the two Centre Alliance senators, Stirling Griff and Rex Patrick, successfully amended the government’s package to knock out stage three, which involves flattening the tax scales so workers earning between $40,000 and $200,000 pay the same rate.
Labor, the Greens and Storer also wanted to knock out stage two of the package, but they lacked the numbers because the two Centre Alliance senators intended to vote with the government.
Stage two, which begins in 2022, lifts the top threshold for the 19% rate from $37,000 to $41,000 and lifts the top threshold for the 32.5% tax rate from $90,000 to $120,000.
Once it had locked in a deal on Wednesday, the government moved to guillotine Senate debate to ensure the bill could emerge expeditiously from the chamber and go to the House.
The government insisted it would not split the package, and demanded it be passed as a whole. The Centre Alliance bloc signalled an unwillingness to sink the entire package in the event it came to a take-it-or-leave-it vote.
Support of the Hanson bloc adds to pre-existing support from Derryn Hinch, Cory Bernardi, David Leyonhjelm and Fraser Anning.
The major parties are using the political fight over the tax package as part of their byelection campaigns, and as the spine of their pre-election messaging on economic policy.
Reflecting the high political stakes, question time in the House has been surly over the past 48 hours, with Malcolm Turnbull seeking to categorise Labor as the enemy of aspiration and Labor seeking to portray the prime minister as arrogant and out of touch with the concerns of ordinary workers.
Labor has rejected all but stage one of the tax package, and will take its alternative plan to voters at the election. The plan involves a more generous rebate for low- and middle-income earners earning up to $90,000, and a temporary higher tax rate on the highest income earners.
Labor said it would repeal the stage two and three tax cuts if it won the next federal election, a stance reminiscent of the GST “rollback” campaign in the early 2000s against the Howard government.
On Wednesday Turnbull railed against the “aspiration-denying smugness of the Labor party” and declared the party was fading because it was “not able to connect to aspirational Australians”.
At one point Labor asked him what the median personal income was in Australia, catching Turnbull flat-footed. He had to take the question on notice.
He was also asked what the government had offered Hanson in return for a positive vote on the tax package. Turnbull declined to answer.
