Bill Shorten will throw out up to $143 billion worth of Scott Morrison's planned income tax cuts

The Labor leader used his budget reply speech on Thursday night to offer 3.6 million low-income earners up to $95 a year more than what the Coalition promised in Tuesday's federal budget.

A person on $37,000 would get $350 when they complete their tax return after July 1 under Labor compared to the $255 being promised by Mr Morrison. Someone on $40,000 would get $549 compared to the government's $480.

Labor has previously hedged on whether it would go further and adopt the second-stage of the Coalition's three-step plan to lower taxes for middle and higher income earners, but has now decided to oppose it.

The second phase is scheduled to begin in 2022 and would lower the tax rate for at least 1.1 million people earning between $90,000 and $120,000. A worker on $120,000 a year would enjoy $2200 more tax relief under the Coalition than what Labor is currently offering.

Labor's economic team is instead examining whether to unveil its own tax reform package that could be targeted at middle income earners.

However, the opposition is also debating whether it is better to use some of the slated cost of the Coalition's tax plan to instead pay down government debt, which current stands at $534 billion and is projected to increase to $585 billion by 2022.

The ALP has already ruled out backing the third phase of the government's plan, which would result in a person on $45,000 paying the same rate of tax as someone on $200,000.

Phases two and three will cost $143 billion between 2022 and 2029.

Mr Shorten said Labor's policy would deliver better cuts to people between now and the next federal election who had been "ripped off" by the government.

"With Labor, 10 million Australians will get the same or bigger tax cut," he said.

Mr Morrison said there was a stark contrast between the Coalition and Labor on taxes.

"Under our government, there is a point in working hard in this country, there is a point in having a great business and working hard in that business and investing in your future. Under a Labor government, there would be no point in working hard because the harder you work, the more they punish you."

While coy on what Labor will do during the election campaign, there is growing support in the tax community for key elements of the government's original plan.

Professor of Finance at the University of Western Australia, Raymond da Silva Rosa, said the Coalition's changes to the tax system could deliver substantial benefits to workers.

He said the cuts on offer were useful, especially the increase in the low and middle income tax offset as this would help those - many women - who were failing to win wage increases. He also said flattening the tax scales overall would act as an incentive for those on middle and higher incomes.

"The tax cuts with significant relief to middle-income tax earners is well targeted; it increases incentives to stay in the workforce and also makes up for the puzzling lack of wage growth notwithstanding a growing economy," Professor da Silva Rosa said.

"I think there are benefits in flattening the tax scales, there are definitely incentives there for people who may have spent a large amount on education before going into the workforce and they're looking to be rewarded and that happens with the broader tax rate."

Deloitte Access Economics partner Chris Richardson said the first round of cuts gave more tax relief to lower income earners while the second and third round delivered more to higher income earners.

He said given how much tax is paid at the top end, these workers would always get a larger benefit from an overhaul reform that was necessary.

"Even when you get to that point in 2024 with the larger tax cuts at the top end, it still is only making up a bit of what's gone on over the last few years," he said.