Labor is calling on the Turnbull government to extend the temporary budget deficit levy, saying if it is removed it will give millionaires a $16,400 tax cut when the deficit is still $37bn.

Jim Chalmers, the shadow finance minister, has criticised the government’s decision last week to freeze the indexation of family tax benefits for two years to help pay for its new childcare package.

He said there were other ways the government could have raised the money, rather than hitting 1.5 million families with an FTB freeze.

Chalmers said the government could have extended the temporary budget deficit levy, which is due to expire on 30 June.

The budget deficit levy was introduced in Tony Abbott’s 2014 budget, imposing a 2% levy on personal income earned over $180,000. It was only meant to be in place for three years and the Turnbull government has no plans to extend the levy in its May budget.

“On 1 July, the government intends to abolish the deficit levy, which will mean a tax cut for a millionaire of $16,400 a year or $315 a week,” Chalmers told the ABC’s Insiders program on Sunday.

“What they could have done, if they had hung on to the deficit levy, is they could have raised three times as much money from a third as many families and only impacted largely the top 1% of earners in this country.

“If that deficit levy was necessary in 2014, when the deficit was only $11bn, it’s more than necessary now that the deficit is $37bn.

“The point I am making ... is there are other ways they could have gone about it. True to form, they chose to attack the most vulnerable families on family tax benefits rather than continue the deficit levy.”

But when asked if a Labor government would maintain the deficit levy until the deficit was abolished, Chalmers wouldn’t answer the question directly.

“It’s for the government to decide,” he said. “We will see what they do in the budget and we will make our decisions after that.

“We call on the government to maintain that deficit levy, go about budget repair and to pay for their priorities in a much fairer way that doesn’t see them go about it attacking people on family tax benefits and taking money out of the pockets of people on middle and low incomes.”

The Turnbull government secured its $1.6bn childcare package last week and, as a precursor to the package, it secured a revised savings proposal worth $2.4bn, which included a freeze in the rate of family tax benefit for two years.

It imposes an indexation freeze in the base rate and maximum payment rates for family payments, saving the budget $2bn between now and 2020-21.

In March last year, the Greens called on the government to make the budget repair levy permanent and to introduce a new 50% tax bracket specifically for ultra-high income earners who earned more than $1m a year.

Modelling by the Parliamentary Budget Office, commissioned by the Greens, showed those two tax changes would raise $4.1bn for the government over four years, and potentially $24bn by 2025-26.