Morrison's tax cut plan hangs in limbo

Shadow Treasurer Jim Chalmers has stuck to Labor's position on the government's tax cut plan.
Shadow Treasurer Jim Chalmers has stuck to Labor's position on the government's tax cut plan.

Scott Morrison's government is yet to find a green light for its $158 billion tax cut package, with Labor refusing to buckle to pressure to change its position on the plan.

The coalition needs the support of Labor or at least four crossbenchers to get the three-stage package through the Senate when parliament resumes next week.

But Labor is sticking with the position its shadow cabinet reached on Monday.

The opposition is enthusiastically backing the first stage of the plan, which will mean extra cash for low and middle income earners when they file their tax returns in the coming months.

But they will only support the second stage, which is due to kick in from 2022/23, if the government brings it forward to the coming financial year in an effort to add fuel to the economy.

The second stage will top-up a low income tax offset and mean more people - earning up to $45,000 instead of $41,000 - will get a 19 per cent tax rate.

They also want to defer legislation on the third stage, which will flatten the tax rate from 32.5 per cent to 30 per cent for people earning between $45,000 and $200,000 from mid-2024.

The government has ruled out splitting the package.

Acting treasurer Simon Birmingham says Australians had made their view clear when they returned the coalition to government on May 18.

"We're not doing this just because we won the election," he told reporters in Canberra on Tuesday.

"We're doing this because it was a promise we made to the Australian people that we would lower taxes, that we would reform the income tax system."

Shadow treasurer Jim Chalmers said Labor's stance was a "negotiating position".

"A responsible opposition, a responsible alternative government, does brainstorm ideas to try and get the place moving again," Dr Chalmers told the National Press Club.

So far on the crossbench, Senator and former Liberal Cory Bernardi is the only person to have backed the coalition's full plan.

Australian Associated Press