Malcolm Turnbull is turning the political playbook upside down.
But it's risky for his coalition government which faces an election as early as July 2.
Previous prime ministers have ducked and weaved when it comes to overhauling the way in which the state and federal governments interact.
The last leader to enter these choppy waters was Tony Abbott, who initiated a "white paper" process but didn't keep the leadership long enough to see it through.
Now Turnbull has issued a challenge to the states - if you want to run schools and hospitals you will have to take responsibility for funding them.
The proposal involves the federal government cutting all marginal tax rates by two percentage points.
The states would have to levy a two percentage point income tax as a surcharge but would directly receive all that revenue - about $14 billion a year.
To keep the federal budget in check, the Commonwealth would take back $14 billion in health and school funding grants.
That means no net increase in funding from the Commonwealth.
But the states would constantly have to weigh up whether to increase their levy as demand grows for services or make their services more efficient - which would be politically dicey for the premiers.
It's the financial equivalent of a squirrel grip.
Turnbull says it's time for the premiers to stop seeing the federal government as an ATM and take a "grown-up" approach.
"What are we in politics for? To take responsibility, to seize the opportunities, to be accountable for the money we spend and if we need more money to go to (voters) and say we need to raise taxes or we need to cut expenditure somewhere else.
"Having more autonomy would make state governments and territory governments better governments."
If it fails, Turnbull is left with few - if any - options for tax reform having ditched changes to the GST and negative gearing.
The premiers appeared taken by surprise when the prime minister made his announcement at a Sydney rugby league grounds on Wednesday.
Labor leader Bill Shorten called it a "thought bubble".
However, Turnbull insists it had been raised privately between the premiers, senior government officials and Treasurer Scott Morrison for a "considerable time".
But he had decided to go public with the offer because the confidential discussions ahead of Friday's Council of Australian Governments meeting in Canberra had been leaked to the media.
Labor was quick to query the prime minister's explanation, pointing to a media conference on Wednesday at which the treasurer appeared to be out of the loop on the policy.
Morrison described the tax plan as "feverish speculation" and urged reporters not to get ahead of themselves.
The "who knew what when" argument feeds into the ongoing saga about whether the relationship between the treasurer and prime minister has broken down and economic policy is being run out of Turnbull's office.
But what is more important is how Turnbull is seeking to head off Labor's attack on him being a "do nothing" leader who has jettisoned many of his core beliefs in a bid to stay in power.
In doing so, he is making himself a bigger target for the opposition.
Shorten, whose Labor team is already closing the gap on the coalition in the polls, has a simple attack line on the tax plan.
"Australians pay more and get less," he says.
The government is also giving the impression that rather than go down the popular track set out in the landmark Gonski report, it has run up the white flag on provide more federal support for state schools.
Even the NSW Liberal government - perhaps Turnbull's strongest supporter in the ranks of the states - is concerned about this.
NSW Education Minister Adrian Piccoli describes the federal government's position on funding as a "breach of faith with all school students in the state".
Federal Labor has pledged to implement the Gonski recommendations "on time and in full".
It's a bold move by Turnbull.
Whether voters buy it is another question.
