A senior business figure has criticised both major parties for sabotaging a potential increase to the GST, after the Prime Minister effectively ruled out the tax hike.

In an opinion piece, Business Council of Australia CEO Jennifer Westacott said a consumer tax increase, along with with other tax reform measures, was necessary to solve the problem of bracket creep.

“In our view, if the GST is not part of a total tax package, the nation’s degrees of freedom to make a real impact on tax relief will be very limited,” Ms Westacott wrote for Fairfax Media.

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“This is not just because the GST is a bigger potential tax base, but because it offers ongoing structural advantages for Australia in an increasingly competitive global economy.”

Labor leader Bill Shorten has vehemently argued against a GST hike. Photo: AAP

The comments came after Prime Minister Malcolm Turnbull said he was unconvinced that a GST hike had passed the “first test” of delivering economic growth — widely interpreted by political analysts as him ruling out the possibility.

“At this stage I remain to be convinced or persuaded that a tax mix switch of that kind would actually give us the economic benefit you’d want in order to do such a big thing,” Mr Turnbull told the ABC.

Cabinet ministers reportedly confirmed to the ABC that the consumer tax increase has been ruled out.

The Business Council’s CEO slammed Liberal and Labor for letting the political debate around tax reform be “dominated” by the GST.

“The escalating scare campaign is a ticking time bomb that risks blowing up what this whole debate is really about,” Ms Westacott wrote.

“The GST may or may not be part of a tax package, but there is absolutely no value in talking about the GST in and of itself.”

The ABC reported the government would look to slash superannuation tax concessions instead, while creating a tax system meant to be less restrictive on economic growth.

It is also possible Treasurer Scott Morrison will return to an earlier idea of sharing some income tax revenue with the states, in exchange for a share of GST revenue, the ABC reported.

Last week, several Coalition backbenchers publicly expressed their concern that campaigning a federal election on a GST increase would cost them their seats.

-with Anthony Colangelo and Jackson Stiles