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Labor would consider reversing their opposition to $20 billion in income tax cuts if the Morrison government accelerated their delivery to July, doubling tax cuts to workers to stimulate a slowing economy. The cuts, worth $2600 for workers earning up to $120,000 a year, were not scheduled to come into force until 2022 under the second stage of the Coalition's three-stage tax plan. The Opposition's surprise shift follows growing concerns that the economy is tanking after it recorded its worst annual result since the global financial crisis. Shadow treasurer Jim Chalmers said Labor would consider all proposals that helped low and middle income earners. His predecessor Chris Bowen previously described stage-two of the income tax cut plan on the "never, never" and "fiscally irresponsible". "We haven't come to a final view on the nature or the magnitude of the tax cuts. If they came to us and said they wanted to have a different timing then I would discuss that with my colleagues," Dr Chalmers told The Sydney Morning Herald and The Age. "We would consider any proposal to get the economy moving again if it was responsible and if it was affordable and if it prioritises people who are more likely to spend in this floundering economy." Reserve Bank governor Philip Lowe urged the Parliament this week to pass the tax package after the RBA cut interest rates to a record low of 1.25 per cent, arguing more fiscal help was needed to stimulate an economy that grew by just 1.8 per cent in the year to March. "If the Reserve Bank says that we need tax cuts to stimulate the economy, the tax cuts in stages two and three don't come into being for 3 and 5 years," said Dr Chalmers. "They have absolutely zero chance of stimulating the economy in 2019 or turning around this feeble growth." Labor's main concern with stage two has been legislating tax cuts that were not due to come into effect until after the next election, accelerating them could overcome this hurdle. Dr Chalmers said bringing forward infrastructure funding and restoring penalty rates would also boost spending and economic activity, while accusing the Coalition of "conning people that they are doing a good job managing the economy". The deputy chief of staff to former treasurer Wayne Swan said one of the features of getting Australia out of the global financial crisis was the Reserve Bank and the government working hand in hand. "The difference now is we have got now is we have a government that has vacated the field on growth and a Reserve Bank which has far less ammunition to get the place moving again," he said. "What people will see from Labor is a policy agenda that works hand in glove with the bank and not in contradiction of it." Labor's shadow cabinet has asked the government for more information on the total benefits for the various income tax brackets. It discussed the three stage $158 billion plan this week and remains strongly opposed to stage three, which would see workers earning $200,000 a year get a tax cut of $11,000 by 2024. Stage one, which both parties support would see a tax cut of $1080 for an average worker delivered in July. Stage two would double this offset and increase the 19 per cent tax bracket from $41,000 to $45,000 and the 32.5 per cent bracket from $90,000 to $120,000. The measure would largely benefit middle-income earners, cost $20 billion over the forward estimates but put the return to surplus in danger. Dr Chalmers said boosting income particularly for middle australia has a growth dividend and urged Treasurer Josh Frydenberg to split the package so stage one could be passed immediatley. "By prioritising people who already have substantial means [through stage three] they are dealing themselves out of the growth dividend which would come if they focused more squarely on middle-Australia," he said. Mr Frydenberg said he would not split the package when he puts it to Parliament as the first order of business on July 1. "The Labor Party should learn the lesson of defeat and get behind this policy which supports aspirational australians low and middle income earners," he said.

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