Finance Minister Mathias Cormann has warned the government will come up with its tax reform plan and take it to the next election if they can't reach consensus with states by March next year.
Senator Cormann said the government was continuing talks with the states and territories after Friday's Council of Australian Government meeting failed to reach an agreement.
"Our preference is to achieve a consensus. In the end, if it's not possible to achieve a consensus, obviously we will have to make judgments on what we can sensibly do ourselves within our respective jurisdictions to improve our tax system," he told Sky News.
Senator Cormann said the government would prefer to reach a consensus agreement to improve the tax system and all options remained on the table.
But if not, it would come up with its own plan which could be outlined in the budget next May.
"Our intention is to take that to the next election for the Australian people to be able to pass judgment on so that we get a mandate and implement that after the next election," he said.
Although the Commonwealth has no preferred option, there will be modelling of the South Australian plan for the GST to be lifted to 15 per cent with some income tax revenue directed to states.
Senator Cormann said the mid-year economic and fiscal outlook (MYEFO), to be released next Tuesday, would show the government policy decisions had improved the budget bottom line.
But in any budget, there were always a range of ups and downs, some, such as the falling price of iron ore outside the government's control.
"That self-evidently is going to flow through in terms of revenue," he said.
Senator Cormann said the government remained optimistic about the economic outlook for Australia, now transitioning from a resource investment driven growth to broader growth.
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