The ATO has responded to insiders who told Fairfax Media that the tax office’s ability to catch corporate tax dodgers was being “gutted” by the agency’s massive downsizing program.

The political row over the ATO’s ability to collect revenue continued on Wednesday with the federal opposition seizing on the insiders’ revelations to try to put pressure on the Abbott government over the thousands of job cuts at the agency.

Two former compliance managers said the Taxation Office's cultural shift away from being "revenue focused" to a "light touch" approach to tax compliance posed grave danger to the $408 billion in revenue collected for the government each year.

But an ATO spokeswoman said internal systems were being redesigned to make life easier for the millions of Australian taxpayers who did the right thing.

“We will design and operate the tax and superannuation systems for the majority of taxpayers who do the right thing, rather than for the few who don’t,” the spokeswoman said.

“We will manage our compliance activities based on risk, transparency and behaviour, knowing that most participants in the tax and superannuation systems are doing so willingly.

“Where people are transparent about their tax and superannuation affairs and participate willingly, we will offer a lighter touch experience that should result in less effort for them in meeting their obligations.”

The spokeswoman said that the “lighter touch” approach meant enforcement efforts would be tailored.

“For those who are not transparent or willing to do the right thing, we will target and tailor compliance activities accordingly,” she said.

“Through this approach, the community can have confidence in our ability to address non-compliance and maintain a level playing field for all.”

Shadow assistant treasurer Andrew Leigh said the revelations showed the government’s position, that the ATO could manage the staff cuts and continue to do its job, was “not tenable”.

“In the face of mounting evidence that the staff cuts at Tax will ultimately result in a massive hit to federal revenue, it is simply not tenable for the government to continue claiming the agency can manage without 3000 of its most experienced staff,” Dr Leigh said.

“The government needs to come clean on how much its short-sighted cuts will really cost when the full price of lost tax revenue is taken into account.”

The government has hit back at Dr Leigh with the parliamentary secretary to the Treasurer, Steve Ciobo, accusing the Labor MP of misrepresenting the facts.

Mr Ciobo pointed to evidence from commissioner of taxation Chris Jordan to a parliamentary committee in June when the commissioner said the ability to collect revenue would not be affected by the job losses.

“For Labor to keep peddling this claim is a deliberate misrepresentation of the facts,” Mr Ciobo said.