Changes to stage three tax cuts pass the lower house

The controversial changes to the tax cuts passed the lower house with the support of the coalition and the crossbench.

Under the amended proposal, those earning under $150,000 will receive a greater tax cut than under the original plan legislated by the former coalition government.

Those earning above $150,000 will still receive a tax cut, but less than previously forecast.

The legislation will move to the Senate for debate, and if it passes, will come into effect from July 1.

Prime Minister Anthony Albanese said the tax cuts represented cost of living relief.

"This is indeed a great day, it is a great day on so many levels, this is a day in which every Australian will get a tax cut, all 13.6 million of them," he told parliament.

"We want people to earn more and we want workers, every taxpayer, to keep more of what they earn."

The coalition had agreed to support the tax cuts, despite initially coming out against the measures.

The opposition did put forward an amendment to the bill, but only to change the legislation's official name to include the phrases "broken promise" and "entrenching bracket creep".

The prime minister said in the 2022 election campaign that Labor would not alter the stage three tax cuts, but Mr Albanese said economic circumstances had changed since the original measures were brought in during 2019.

"This package is a package that doesn't leave people behind who earn under $45,000 a year," he said.

"Politicians will get less from this legislation, but average workers will get more."

Treasurer Jim Chalmers said Australians were another step closer to having the tax cuts put in place.

"The tax cuts that we passed today are a combination of relief and reform and responsibility," he told reporters in Canberra.

"More relief for middle Australia, better reform for our economy, and consistent with the responsible approach that we have taken to managing the budget and also managing the economy more broadly."

Dr Chalmers said the tax cuts were the ideal way to manage financial pressure for households.

"It became increasingly clear to us over the course of summer that the tax system and particularly the stage three tax cuts were the most effective way to provide more cost of living relief to more people without adding to inflation," he said.

But opposition MP Bert van Manen said the tax cuts did not go far enough to provide substantial relief.

"We're seeing nothing in this bill that will deal with the cost of living, $15 a week is not going to scratch the surface when people are at a minimum of $150 a week worse off," he said.

Australian Associated Press