SYDNEY (AFP) ― Australia on Thursday axed a divisive carbon tax after years of vexed political debate, handing the government a key victory 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 with repealing the pollution levy as a central campaign platform, arguing the cost was being passed to consumers, resulting in higher utility bills.