Labor sources said the party was moving irrevocably towards waving through the cuts but had to go through the process first of trying to amend them.

Separately, the government remains close to securing the support of the Senate crossbench to pass the cuts. Needing four crossbench votes, it has the support of Cory Bernardi and the Centre Alliance, which is inclined towards the cuts. They had another meeting late on Monday with Finance Minister Mathias Cormann.

Centre Alliance has negotiated a package of measures to reduce gas and power prices, including policies already under consideration including a tougher domestic gas security mechanism and a domestic gas reserve for the east coast.

Resources Minister Matt Canavan said the gas measures would be announced after there was a deal on tax cuts.

Jacqui Lambie is also negotiating with the government whereas One Nation is holding out.

Labor is also trying to talk the crossbenchers into supporting its push to amend the bill. Labor supports stage one, wants to fast-track parts of stage two and postpone debate on stage three.

Stage one is backdated to July 1, 2018 and worth $15 billion of the $158 billion. It will more than double the end-of-year rebate for low and middle-income earners, from $530 to $1080.

Stage two begins on July 1, 2022. It increases the income threshold under which the 32.5 per cent rate applies from $90,000 to $120,000.


It also increases the top income threshold for the 19 per cent tax bracket from $41,000 to $45,000 but Labor does not want this part brought forward because it would blow the budget surplus.

Stage three would start on July 1, 2024, and apply a tax rate of 30 per cent to all income between $45,000 and $200,000.

Treasurer Josh Frydenberg said by continuing to oppose the tax cuts, Labor leader Anthony Albanese had failed to heed the lesson of the May 18 election or of the listening tour he conducted afterwards.

"This was Anthony Albanese's first test and he failed, and he failed badly," he said.

Mr Frydenberg said Labor had come up with multiple different excuses as to why it opposed stage three.

Trade Minister Simon Birmingham said "this will hang around the Labor Party's neck as a stench all the way through this term of Parliament if they genuinely stand in the way of delivery of tax relief for Australians".

Should the tax package pass, either with the support of Labor and/or the crossbench, Mr Chalmers said the party would then have a discussion about whether to repeal stage three which, he said, was too expensive and of dubious benefit in terms of economic stimulus.

There is significant resistance inside the party to repealing stage three, part of which has already been legislated.


Last year, in the first round of tax cuts worth $144 billion that passed Parliament, stage three involved a 32.5 per cent rate on all income between $41,000 and $200,000. The $158 billion package would drop that rate to 30 per cent and lift the lower income threshold to $45,000.

In total, stage three would cost $137 billion by the end of the decade.