Tony Abbott should stop using "code language" and be up-front about his plans to increase the GST, Labor says.
Shadow assistant treasurer Andrew Leigh has seized on a speech given by the prime minister over the weekend in which he said the "dog's breakfast" of federation needed to be fixed.
Although he didn't mention the GST by name, Mr Abbott said his government would be ready to work with states on reforms to improve their tax base - including changes to indirect taxes.
Mr Leigh said the prime minister had "resorted to code language" on his plans to increase the GST.
"What Tony Abbott wants to do ought to cause the hairs on the back of Australians' necks to stand up," he told reporters in Canberra.
The government had stripped $80 billion in health and education funding in the May budget "to starve the states into submission", he said.
"So they go along with what the Liberal party has always wanted, which is a higher GST," he said.
South Australian Premier Jay Weatherill said if the prime minister wanted co-operation on tax reform, he should restore the funding.
"Give us our $80 billion back and we'll sit down and have a good discussion with you," he told ABC radio.
"I would have thought a starting principle of federation is that governments ... keep their agreements each to the other."
Mr Weatherill, the only state Labor premier, said he didn't believe the federation was broken and it was unrealistic to expect governments to get out of each other's way.
He described a push by Western Australia for a greater share of GST as "morally bankrupt", saying WA had been propped up by other states for many years.
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