Joe Hockey has promised his review of the tax system will result in meaningful reform and not just more "band-aid solutions".
The treasurer has hinted at individual income tax rate cuts that are set in a way that don't push talented Australians into working abroad, while saying bracket creep must be addressed to stop people being forced into higher tax brackets through wage inflation.
"It is better to leave money in the pocket of the taxpayer ... citizens know best how to spend their money," Mr Hockey told a tax conference in Melbourne on Wednesday.
But he again ruled out leading the charge on increasing the GST rate or broadening its base, even though he wants to see the revenue raising capacity of the states to be more aligned to their responsibilities of funding and service delivery.
"Let me be very clear. No (GST) change will be considered without the unanimous agreement of state and territory governments and bipartisan support in the federal parliament," Mr Hockey told the PwC tax reform forum.
Opposition finance spokesman Tony Burke warned if Mr Hockey wants the states to raise all the money they spend, it would result in a "massive" hike in the GST rate.
Victorian Labor Premier Daniel Andrews said he would not support a GST increase or broadening it to include food.
Mr Hockey said if that is the case, the federal government is not going to be arguing for a tax change the beneficiary doesn't want.
"It's effectively game over," he said.
Australian Chamber of Commerce and Industry boss Kate Carnell said the "head-in-the-sand" approach to GST must end or Australia will lose its competitive edge.
Property Council of Australia chief Ken Morrison welcomed the treasurer's call for a proper debate on state taxes and their over-reliance on inefficient taxes.
A survey released by the council this week showed that people believe a rise in the GST rate and a broader base is inevitable so that harmful stamp duties can be abolished.
Housing Industry Association senior economist Shane Garrett agreed that stamp duty makes housing less affordable.
Mr Hockey told the conference he believes he has found a way to collect GST on parcels and goods imported into Australia, which has previously been seen as not cost effective.
Australian retailers have long argued they are at a disadvantage because of internet shopping of foreign goods which do not attract GST up to $1000.
But Mr Hockey said that as a result of consultations with the United Kingdom and a number of other jurisdictions he believes there is a new way of collecting the GST on imported parcels and goods, which he will share with state treasurers when they meet in August.
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