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PM's income tax plan to hit parliament


Finance Minister Mathias Cormann has accused opposition MPs of being divided over the PM's income tax plan (AAP Image/James Ross) 

The Morrison government is keeping the focus on Labor as it prepares to introduce its $158 billion tax cut package to federal parliament, even though the crossbench is likely to determine its fate.

Finance Minister Mathias Cormann has accused opposition MPs of being divided over the plan, after some Labor MPs urged their colleagues to back the full tax relief package during a caucus meeting in Canberra.

"The Labor Party is deeply divided on a core economic policy measure," Senator Cormann told ABC News.

After the formal opening of parliament on Tuesday morning, the federal government will jump the first hurdle in its bid to cut income tax, securing lower house support for the bill using its slim majority.

The tax cuts are likely to come down to winning Jacqui Lambie's support in the Senate.

The returning Tasmanian senator is yet to declare her hand, but her vote will be vital for the government, if it is to pass its three-stage plan.

Former Liberal Cory Bernardi and the two Centre Alliance senators support the tax relief package, leaving the government just one vote short.

Labor is sticking by its refusal to back the full plan, with the caucus on Monday endorsing the shadow cabinet's position.

It is offering to support extra tax relief only if the second stage of the package is brought forward and the third stage is shelved, but Prime Minister Scott Morrison says that's not what the public voted for at the election.

"They voted for the personal income tax plan that we set out in the budget," he told ABC's 730 program on Monday.

"I'm very confident we'll be able to take these bills through the parliament, with the support of the parliament and those parliamentarians who don't want higher taxes."

The first stage of the plan will deliver up to $1080 to low and middle-income earners when they lodge their tax returns in coming months.

The second stage will top up a low income tax offset, which means more people - earning up to $45,000 instead of $41,000 - will get a 19 per cent tax rate.

The final stage will flatten the tax rate from 32.5 per cent to 30 per cent for people earning between $45,000 and $200,000 from mid-2024.

© AAP 2019