Jim Chalmers warns restoring tax cuts to high earners would ‘smash’ budget by almost $40bn

Treasurer Jim Chalmers said if the Coalition stuck with the old stage-three tax cuts, it would risk racking up more debt for high income earners and upwards pressure on inflation. Photograph: Mick Tsikas/AAP

The federal government is seeking to head off amendments to its stage-three tax cut package, releasing data claiming that possible Coalition changes would “smash the budget” by almost $40bn.

Jim Chalmers’ office has released the estimate, saying the combination of Labor’s low- and middle-income tax cuts with the restoration of money taken from high-income earners – a compromise some believe the Coalition will attempt – would cost the budget $39bn.