Income tax cuts aimed at people earning up to $200,000 a year have been dumped in the Senate, which voted to split the coalition’s tax bill.

In a blow for the government, Labor and the Greens teamed up to tie an upper house vote, effectively stripping out the third and final stage of the cuts due to start in 2024.

Earlier, in a wide-ranging speech in the Senate, One Nation leader Pauline Hanson hinted at supporting the tax package, but warned stage three might be unaffordable.

One Nation’s senate votes are crucial to the success of the tax cut package.

Senator Hanson wants the government to force multinational companies to pay more tax and politicians to refuse wage rises to pay for tax relief.

“Hard-working Australians need a helping hand – they need to know they are going to get something back,” she told parliament.

However, she refused to finally say which way she would vote on the bill.

The government can restore the package to its original form in the House of Representatives, where it controls the numbers. The bill would then bounce back to the Senate for approval a second time.

Prime Minister Malcolm Turnbull said “of course” the government would send the bill back to the Senate, because the coalition was committed to the full tax plan.

Prime Minister Malcolm Turnbull in question time on Wednesday. Photo: AAP

Labor also opposes stage two of the plan, which includes increasing the top threshold for the 32.5 per cent tax bracket from $90,000 to $120,000.

On Wednesday, shadow treasurer Chris Bowen thanked the Greens, the Centre Alliance and independent senator Tim Storer for rejecting stage three of the package.

“It is now incumbent on the government to accept the will of the parliament,” Mr Bowen he said, while also taking aim at One Nation.

“If there is a side deal between Senator Hanson and the government, they should ‘fess about it today,” he said.

Finance Minister Mathias Cormann said Labor had effectively endorsed the second stage by asking the upper house to vote only on cuts starting in 2024.

“Somewhere overnight the Labor Party position has shifted,” Senator Cormann told parliament on Wednesday.

“It makes absolutely no sense for you not to have tried to get your policy tested in the Senate. You did not even try.”

There is broad support for the first tranche of tax cuts, which introduce a new low- and middle-income tax offset worth up to $530 for individuals from July 1.

-with agencies