Stage 3 tax cuts row gets personal as Anthony Albanese delivers withering three-word verdict of Peter Dutton after he called the PM the ‘liar in the Lodge’

Bigger tax cuts for lower and middle income earners are all but inevitable as Peter Dutton sets up the battleground for the next election.

The Opposition Leader confirmed he would not stand in the way of Labour’s revised Stage 3 tax cuts after a party room meeting with Coalition MPs.

But the announcement has done little to cool the political row over the package and the prime minister’s broken election promise to implement the original phase 3 cuts.

Mr Dutton described him as a “liar in the box” and attacked Anthony Albanese’s credibility when he promised to pursue strong tax policies at the next election.

But Albanese accused the opposition on Tuesday of being “dishonest” by ultimately agreeing to implement the changes announced on January 25, despite an ongoing attack on them.

“What that tells me is that they are not fair dinkum,” Albanese told ABC’s 7.30 of the coalition decision.

“We made a difficult decision, but it was the right decision, made at the right time and for the right reasons.

“It shows that they were insincere in their complaining because if they were honest, they would not only vote against it, but do what Sussan Ley said they would do, but reverse it.”

Mr Albanese (right) accused the opposition of being ‘dishonest’ by ultimately agreeing to implement the changes announced on January 25, despite an ongoing attack on them

Mr Dutton’s announcement on Phase 3 followed a joint meeting in the party room where the majority of MPs agreed to table amendments but would wave the tax plan through if they ultimately failed.

“We support this change, not to support the Prime Minister’s lie, but to support those families who need help now, because Labor has made decisions that have made things much harder for those families,” he said.

“We will be pursuing important tax policies heading into the next election that will reduce taxes for Australian taxpayers, because we know significant support will be needed to help Australian families recover from this period of labor.”

What Mr Dutton’s tax policy might look like will only be revealed closer to the next election.

One of the architects of the original plan, former Treasurer Scott Morrison, spoke about the merits of the first set of three phases.

The coalition’s support paves the way for the proposal, which reworks Morrison-era policies to give workers earning less than $150,000 a bigger tax cut, to be passed by Parliament ahead of Albanese’s Easter deadline, which is on comes into effect on July 1.

As Treasurer Jim Chalmers introduced the legislation to the House of Representatives and Mr Dutton made his announcement, Coalition senators lined up to lash out against the tax plan.

Finance Minister Katy Gallagher was forced to withdraw after accusing the opposition of disrupting the business of the Senate by ‘whining and grumbling’.

“If that’s the best you’ve got, we’re on pretty solid ground,” she said.

“It shows they were insincere in their complaining because if they were honest they would not only vote against it… but reverse it,” Mr Albanese said on ABC’s 7.30

The motion, which called on Albanese to apologize to voters for breaching his promise to keep Stage 3 as it was legislated in 2019, failed after the Greens voted with Labour.

This is despite the Greens leaving the door open to forward the tax cuts to a Senate inquiry, delaying the vote and throwing the Easter deadline into doubt.

No decision was made at the Greens’ party room meeting on Tuesday morning on whether they would support the changes – arguing more needed to be done to make phase 3 fair.

Under the revised tax plan, the lowest tax bracket would be reduced from 19 percent to 16 percent for income under $45,000.

The 37 percent tax rate would remain in place for those earning between $135,000 and $190,000.

Reserve Bank Governor Michele Bullock played down concerns that the revised tax plan would put further pressure on demand, spending and inflation.

‘If you look at the analysis of the Ministry of Finance, which is published on the website, yes “I actually did a little bit of analysis to see what might happen depending on the different marginal propensities to consume,” she said.

‘The bottom line is that the budget envelope is the same. It is the same amount distributed to households, but distributed slightly differently. We do not think this will have any consequences for our forecasts.’