Controversial tax cuts that would benefit high earners must be scrapped to fund desperately needed cost-of-living relief, welfare advocates say.

In a letter to the Prime Minister and Treasurer, the Australian Council of Social Service has called on the government to abandon its commitment to stage three tax cuts.

Though the policy was announced by the previous government, Prime Minister Anthony Albanese has recommitted to it, a move ACOSS said would provide no help to those on lower incomes and instead would fuel inflation.

“Stage three is a hand up to society’s wealthiest,” ACOSS chief executive Cassandra Goldie said on Thursday.

“[It will] feed inflationary spending and compound cost of living pain for people with the least.”

The tax cuts, which come into effect on July 1, will create a single tax bracket for workers earning between $45,000 and $200,000 a year.

Though workers with a taxable income above $45,000 will benefit, more than 80 per cent of the cuts will go to those in the top 20 per cent of incomes.

For example, Australians who earn more than $200,000 will take home an extra $9000 each year.

But those in the lowest third of incomes would not benefit at all, ACOSS’s letter said.

If the government wanted to reduce financial pressure on lower-income communities it should drop the policy and redirect savings into programs, Goldie said.

ACOSS has suggested raising income support payments such as JobSeeker and Youth Allowance to at least $78 a day and reducing energy bills on an ongoing basis.

The federal government has also been urged to work with state and territory counterparts to end no-grounds evictions and limit rent increases, and fund homelessness, domestic violence and community legal services.

“The upcoming May budget must provide meaningful cost-of-living relief for people with the least,” Goldie said.

Albanese on Monday reaffirmed the government’s position on the tax cuts and said tax relief was one way to assist Australians.

-AAP