Stage three, which Labor has yet to officially declare it will oppose in the Senate, will cost $41.6 billion by 2028-29 as the 45 per cent tax rate threshold is increased from $180,000 to $200,000 and a single flat-tax rate of 32.5 per cent is applied to all taxpayers earning between $41,000 and $200,000. The total value of the cuts doubles in size from 2022-23 when they cost $13 billion a year, accelerating quickly to $19.5 billion a year by 2025-26 and finally to $24.6 billion by 2028-29. Once all components of the signature budget measure are in place, the total cost will dwarf former Treasurer's Peter Costello's final tax cuts. Based on the 2007-08 budget papers, those would be worth $10.4 billion in 2018 dollars, although the latest tax cuts will be only slightly larger as a proportion of government spending. Labor is keen to avoid being accused of blocking tax cuts for workers struggling with historically low wage growth as both parties shift into an election gear, but has indicated it will use the Senate to review the third stage of the legislation. The government has refused to split the bill into three stages, which would allow the first tranche of tax relief worth up to $135 for 3 million taxpayers to be delivered immediately to low-middle income earners from July this year.

The Greens will use the numbers to heap pressure on Labor to abandon their support for stage two and three of the cuts, after Labor voted them through the House of Representatives in May. "It is beyond belief that the Labor Party is even considering supporting the second stage of Turnbull’s personal income tax cuts that will turbocharge economic inequality in Australia and lead to the loss of $80 billion in revenue for our schools, hospitals and essential services," said Greens leader Richard Di Natale. Greens leader Senator Richard Di Natale Credit:Alex Ellinghausen A Senate inquiry will hear from the country's top economists on Wednesday, including the Grattan Institute, the National Centre for Social and Economic Modelling, and the Australian National Centre for Social Research and Methods, before Treasury faces questions over the impact of the cuts. In its submission Treasury said Australia's personal income tax revenue accounted for 41.5 per cent of the tax revenue raised by all levels of government in Australia and 11.7 per cent of GDP, compared to the OECD average of 24.4 per cent and 8.4 per cent respectively.

They confirmed that those who earned below the tax-free threshold of $18,200 would not be receiving the low-income tax offset of up to $530 once it comes into effect from 2018-19, because they had not earned enough to pay any tax. The revelation will be latched onto by One Nation leader Pauline Hanson as she looks to negotiate with the government, after she raised concerns about income tax relief not going to the lowest-paid taxpayers. Treasury said the largest tax burden was on the highest earners under Australia's progressive tax system, and that taxpayers will face higher average, and sometimes marginal, tax rates over time even if their income has only increased by inflation. "The aim of the tax system is to raise revenue as simply as possible, while also being fair and efficient," the submission stated. "Higher marginal tax rates can act as a disincentive to work, save and invest so that systems with higher marginal tax rates—and a greater distance between marginal and average tax rates—tend to generate greater inefficiencies."

Treasury found single parents and workers with relatively low wages or levels of educational attainment were the least likely to be incentivised to work into a higher tax bracket. The submission, posted publicly before the Budget Office costing was released by the Greens, warns forecasts beyond 2021-22 incorporate a range of medium term assumptions that carry a higher amount of uncertainty.