The Opposition has committed to taking a tax reform package "in keeping" with the stage three tax cuts to the next federal election.
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Affirming that the Coalition would vote for the Albanese government's tax changes, Opposition treasury spokesman Angus Taylor nevertheless accused Labor of worsening the cost-of-living crisis, playing "the politics of envy" and breaking its promise to voters.
Mr Taylor said the tax cuts were needed because bracket creep had come "like a thief in the night" to drive a 27 per cent increase in personal income tax collections in 18 months, decimating household budgets.
"We're voting for tax relief that is required because of the Labor government's failed economic management," the Liberal MP said.
Prime Minister Anthony Albanese announced late last month that the government would alter the legislated stage three tax cuts to extend and increase relief to low and middle income earners and reduce the amount going to those on high incomes.
The changes include cutting the 19 per cent tax rate to 16 per cent, reducing the 32.5 per cent rate to 30 per cent for those earning between $45,001 and $135,000, retaining the 37 per cent tax rate for those on between $135,001 and $190,000 and bringing the threshold for those paying 45 per cent tax down from $200,000 to $190,000.
In carefully worded remarks, the shadow treasurer said the Coalition would not oppose the reduction in the lowest tax rate to 16 per cent "because Australians are hurting from the government's mismanagement of the economy".
But, he added, "the Coalition is committed to going to the next election with a tax reform package that is in keeping with the stage three tax cuts".
The phrasing means the Opposition will not necessarily seek to reinstate the original stage three tax package, a move the government has said would cost an extra $28 billion.
While backing the government's tax package, the Coalition has instead focused its attack on the prime minister's credibility, arguing that his backflip on the stage three cuts is a betrayal of voters.
But the government believes its changes, which will increase the tax cut for 11.6 million wage earners, is a political winner for it.
Mr Albanese told parliament on Thursday the government's changes were "aimed squarely at middle Australia, helping low and middle income earners who are under financial pressure".
Pointing to the Coalition benches, the prime minister added that, "those opposite would never have thought of doing this and they're already working on how to undo it. Their gut reaction was to oppose it".
Highlighting the awkward political position the revised tax package put the Coalition in, Mr Albanese accused the Opposition of voting for the tax change while "arguing against it at the same time".
Treasurer Jim Chalmers told Question Time that "they [the Opposition] say they support our tax cuts, but their heart's not in it".
"If they really support these tax cuts, why are they still bagging them?" Dr Chalmers said.
But Mr Taylor said that while the Coalition backed increased tax cuts for low and middle income earners, "what we don't support is taking it from another group of Australians".
"That's why we will take to the next election strong tax reforms that are in the spirit of the stage three tax cuts," he said.
Mr Taylor said the "radical left has taken over" economic policy and the government was intent on playing "class wars".
He lamented that "tax reform in this country appears to be dead".
The Coalition's support means the changes will come into effect from July 1.