Australia

Government pressures Labor to back tax cuts

The government is pushing Labor to back a $158 billion package of tax cuts. (AAP)

The Morrison government is ramping up pressure on Labor to back its promised tax cuts ahead of parliament resuming this week.

Scott Morrison's government has suggested it won't let the Labor Party off easy if it fails to back its full $158 billion package of tax cuts, as the clock runs down on its remaining time to rally support for the plan.

But the opposition wants to see whether Senate crossbenchers green light the plan before declaring how it will vote on the tax relief.

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The Coalition needs the support of Labor or four of six crossbenchers to get its full three-stage plan through the upper house when parliament resumes in earnest later this week.

So far Labor has refused to back the full plan, offering to support extra tax relief only if the second stage of the package is brought forward and the third stage is shelved.

The Coalition has given them no ground, saying it won't split the bill.

Labor frontbencher Katy Gallagher said the party will consider its position on the package when its caucus meets early this week.

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But what they decide may not be the party's final stance, as they keep an eye on whether the government gets enough crossbench support.

"We would have to take decisions based on what was happening at the time," Senator Gallagher told Sky News on Sunday.

Government frontbencher Simon Birmingham has accused Labor of "verbal gymnastics" and has warned them that not backing the plan could have long-term consequences.

"The failure to deliver tax relief for hard-working Australians will be a stain that will haunt Labor and Anthony Albanese all the way to the next election if they block this agenda," he told reporters in Adelaide.

The first stage of the plan will provide up to $1080 extra for low and middle-income earners when they lodge their tax returns in the coming months, as an offset for them is doubled.

Labor wants the second stage, which is due to kick in from 2022/23, to be brought forward to the coming financial year.

That 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.

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The final stage 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.

Left-leaning think tank The Australia Institute is appealing for a Senate inquiry to check whether Labor's concerns that the third stage may be unaffordable for the budget in five years time are warranted.

So far the only crossbench senator to have backed the plan is former Liberal Cory Bernardi.

But the two Centre Alliance Senators have been been in talks with the government about measures to keep gas prices low to ensure the potential extra tax relief wouldn't be chewed up by power bills.

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