Under the stage three tax cuts as they stand, the 37 per cent marginal tax rate will be scrapped for those earning between $120,000 and $180,000 a year.

The 32.5 per cent tax rate will also be lowered to 30 per cent, a rate that would be applied to each dollar earned between between $45,000 and $200,000.

Mr Albanese committed to implementing the cuts in full ahead of the last election.

Shadow treasurer Angus Taylor said the signalled policy shift was “an egregious betrayal of the Australian people”.

“The prime minister and treasurer lied to the Australian people over 100 times by saying they were committed to these tax cuts,” he told Sky News.

Mr Taylor also said the government had “declared war on aspiration”.

“These tax cuts are enormously important to give aspirational Australians, those who are working hard to get ahead, the certainty they need to know that they can keep 70 cents in the dollar across the broad range of tax brackets they might encounter,” Mr Taylor said.

Australia’s largest business groups also urged Labor to stick to its promise.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said tinkering with the stage three tax cuts at this late stage was a “retrograde step”.

He said the two earlier stages in the tax relief package had already delivered relief to taxpayers on lower incomes and a failure to follow through on the final round would discourage workforce participation.

“We want to encourage aspiration and encourage ambition,” he told reporters on Wednesday.

Australian Council of Trade Unions secretary Sally McManus welcomed the government’s efforts to take financial pressure off workers.

“The proposal of the stage three tax cuts, which would mean that the baristas, the hospo workers, the retail workers, the childcare workers of Australia, would get absolutely nothing, is just not fair, it’s not tenable,” she told reporters on Wednesday.

Australia Institute economist Richard Denniss said a promise had been broken but it was “a very good idea”.

“That was the policy designed by Scott Morrison seven years ago, before COVID, before the cost of living crisis, before real wages fell for consecutive years,” Dr Denniss told ABC radio.

Rich Insight economist Chris Richardson warned the reported tax cuts would still be inflationary.

“If the latest round of speculation is right … the size of the tax cuts will be the same, in dollars, the timing is going to be the same, so still contains the same inflation risks,” he told Sky News on Wednesday.

Greens senator Mehreen Faruqi said the government should scrap the tax cuts entirely.

“We’ve waited years for Labor to find some courage to stop these tax cuts for the rich, and now we’re still waiting to see whether their stage 3.1 will still turbocharge inequality,” she said.

“Politicians and billionaires simply don’t need any more money.”