SYDNEY - Australia on Thursday axed a divisive carbon tax after years of political debate, handing the government a key win after it went to the polls last year vowing the levy would go.
The upper house Senate voted 39-32 to scrap the charge that was imposed by the former Labor government on major polluters from 2012 in a bid to reduce carbon emissions.
It followed days of protracted negotiations with the minor Palmer United Party, which embarrassed the government last week by pulling its crucial support for repeal of the tax at the last minute.
But powerbroker Clive Palmer won concessions for tougher measures to ensure cuts to electricity and gas prices were passed through to consumers and businesses and the legislation was passed to subdued applause.
Prime Minister Tony Abbott went to the polls in September vowing that the pollution levy would go, arguing the cost was being passed to consumers, resulting in higher utility bills.
"This is great news for Australian families and for our nation's small businesses," said Abbott, who once claimed evidence blaming mankind for climate change was "absolute crap".
"We are honouring our commitments to you and building a strong and prosperous economy for a safe and secure Australia," he added.
The government says dumping the tax would save households Aus$550 a year and strengthen the economy, which is among the world's worst per capita polluters due to its reliance on coal-fired power and mining exports.
Under the carbon tax, the country's biggest polluters paid for the emissions they produced, giving them an incentive to reduce them.
The Abbott administration - the first post-war Australian government not to have a science minister - favours a "direct action" plan that includes financial incentives for polluters to increase their energy efficiency.
Ahead of the vote, Greens leader Christine Milne said abolishing the tax would make Australia an international "pariah".
"We will be a global pariah as the rest of the world moves to try to secure a treaty in 2015 to give people on this planet a chance of survival in the face of a climate emergency," she said.