Labor finance spokesman Tony Burke says if Joe Hockey wants the states to raise all the money they spend, it will result in a "massive" hike in the GST rate.
The treasurer will tell a tax forum in Melbourne on Wednesday that he believes the revenue raising capacity of each tier of government should be aligned to responsibilities of funding and service delivery.
"This principle that the states would have to raise everything that they spend can only mean one thing, and that is a massive hike in both the rate and the base of the GST," Mr Burke told reporters in Sydney.
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