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AAP
AAP
Politics
Kat Wong and Andrew Brown

Battle lines drawn over tax cuts as election looms

Treasurer Jim Chalmers rejects claims the budget is just an election pitch. (Lukas Coch/AAP PHOTOS)

An extra $5 a week in tax relief could define the early stages of a cost-of-living election.

As Treasurer Jim Chalmers began his budget sales pitch on Wednesday, plans for the modest cut were raced through parliament in the final sitting week before the poll to make the measure a key battleground issue.

The break would make for a $268 yearly saving from July 2026, or $5 a week, before a reduction of up to $536 the year after.

The Australian $5 note along with text
Plans for tax cuts for every Australian worker have been rushed before federal parliament. (Aap Image/AAP PHOTOS)

While the  legislation comfortably passed the House of Representatives, the coalition opposed it, with Opposition Leader Peter Dutton describing the budget as a "cruel hoax".

The laws were expected to pass parliament on Wednesday night.

Dr Chalmers said a "brain snap" from shadow treasurer Angus Taylor in opposing the tax cuts had led to the coalition voting down against relief measures just weeks out from an election.

"If you really cared about the cost of living, you would have voted for our tax cuts, instead you voted for higher taxes on every Australian worker. Well done," the treasurer told parliament on Wednesday.

"He decided in the face of these cost-of-living pressures, to recommend to his backbench that they vote against a tax cut for every Australian worker to help them with the cost of living."

Mr Dutton said the budget was little more than a pre-election pitch and flagged that he would unveil his own relief measures in his formal reply on Thursday night.

"The government offering 70 cents a day - it's just a rounding error for families," he told Sky News, referring to the impact of the first round of cuts.

"It's about the next five weeks, not the next five years."

Opposition Leader Peter Dutton
Opposition Leader Peter Dutton is expected to reveal financial relief measures in his budget reply. (Lukas Coch/AAP PHOTOS)

With Prime Minister Anthony Albanese expected to call the election within days and the polls showing a tight race, Dr Chalmers rejected the criticism.

"A budget is never about one week or five, it's overwhelmingly a program for the years ahead. Ours also makes the economic case for re-election," he told the National Press Club.

"This budget is about more than turning the corner, it's a plan for where we go next, not just putting the worst behind us."

Mr Albanese played up his government's achievements and spruiked Labor's plan to set up the country in the years to come.

"We have introduced not just the tax cuts for all, we have ensured real wages are increasing five quarters in a row," he told parliament.

A customer at a market
The federal government promised cost-of-living relief for voters in the budget. (James Ross/AAP PHOTOS)

The shadow treasurer said living standards had collapsed during the parliamentary term and the tax cuts would do little to address the issue.

"It simply doesn't cut it in terms of giving us the economic pathway we need to restore hope, which is fading fast for so many Australian families," he told ABC Radio.

"We've been in tough situations before as a country and we've got out of them by managing the economy well."

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