Joe Hockey has emphatically ruled out lifting the GST, saying Australians can't afford any increase.
The Organisation for Economic Co-operation and Development (OECD) has urged Australia to boost or broaden its goods and services tax, saying its rate of 10 per cent is low by international standards.
But the treasurer has rejected talk of a hike, saying the OECD is not looking at the "full picture" of the Australian economy.
Any increase in the GST would have to be accompanied by tax cuts to compensate low and middle income Australians, he told the Seven Network on Thursday.
"We haven't got the financial capacity to do that at the moment," he said.
"Also, I don't think it is the right time at all to increase prices for Australians. I think they've got enough pressure on family budgets as it stands."
If the government were to change its mind, it would take any GST hike to an election, Mr Hockey said.
Peter Costello believes it is more a case of the government not being able to afford a change to the GST.
The formal Liberal treasurer who introduced the impost in 2000 said the Howard government nearly lost an election over it, despite having started with a huge majority.
"If you're going to have a discussion about tax reform, it's preferable to start when you've got a bit of padding amongst public opinion, because this is hard," he told ABC television.
He said if you think balancing a budget is hard, tax reform is "off the Richter scale" in terms of political difficulty.
He said it is not just a matter of increasing the GST, it's what Australia gets in return.
"If we don't get cuts in income tax, company tax, and other efficiencies, it's not worth doing," he said.
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