Concerns have been raised that changes to negative gearing would wreck investor confidence in the housing market but reform proponents want tax breaks wound back.
Despite insisting there are no plans to touch negative gearing, Labor ministers are being criticised for using the same language they did before announcing changes to stage three tax cuts.
"The debate now is about what comes next because Jim Chalmers, when you look at his words, he's got these cute form of words around negative gearing and dividends," Opposition Leader Peter Dutton told Sydney radio station 2GB.
"Jim Chalmers is on this crusade to be Robin Hood and in the end, all it'll do is kill aspiration (and) investment."
Families paying down their mortgage would no longer look to invest in the housing market and use the rental income in retirement, while a retrospective scrapping of negative gearing would cause a large property sell-off, Mr Dutton said.
"All they'll do is kill confidence in the economy ... they'll go into shares or other investments," Mr Dutton said.
Finance Minister Katy Gallagher hosed down the prospect of any changes to negative gearing, saying the opposition was chasing a red herring as they had no coherent response to the revamped tax cuts.
"That's the only thing the opposition can complain about because they can't complain about the fact that under our plan, more people get bigger tax cuts," she told reporters in Canberra.
Governments need to respond to economic circumstances and Labor had been clear about why it changed its position, Senator Gallagher said.
"Every media outlet, any person you talk to in the street has been talking about cost of living pressures and what more can be done to get more money into people's pockets and we have responded to that," she said.
Reducing the tax bill for all taxpayers would increase aspiration, Labor MP and economist Andrew Charlton said.
"Aspiration isn't just about the top or the bottom," he told Sky News.
"In this tax cut, every single Australian will be paying lower tax going forward and every single Australian will have a better chance to get ahead."
Reducing tax across the board meant Australians would still be incentivised to push their income up despite bracket creep and the top bracket threshold being lower than it otherwise would have been in stage three, Dr Charlton said.
"So every Australian now has higher incentives to work, not just a small number," he said.
"So it's a reform that's been extended right across the income spectrum."
The Greens want the government to go further when it introduces its tax package to parliament next week, calling for negative gearing reform and a potential increase to welfare payments in exchange for their support in the Senate.
But Prime Minister Anthony Albanese ruled out "trading across different issues" while Senator Gallagher said other measures to relieve budgets were being looked at.
The government is constantly reviewing what other cost of living relief could be provided ahead of the upcoming May budget, Senator Gallagher said.
"Every budget we look at what's possible, what's affordable," she said.
