Federal Government ministers have told the ABC the Coalition has abandoned the idea of lifting the Goods and Services Tax (GST), but its tax plans may still contain some bold ideas.

Prime Minister Malcolm Turnbull all but confirmed the decision to take a GST hike off the table, when he said it had not passed the “first test” of delivering economic growth.

“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 Insiders.

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Ministers have told the ABC it would be sensible to officially end the debate around the GST soon, but that tax reform would still have to be delivered in the federal budget in May.

The Government will now look to cut superannuation tax concessions, as it seeks to deliver income tax relief to low and middle income earners, while designing an overall system that is less of a drag 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.

Mr Morrison this morning echoed the Prime Minister’s view that there were “real problems” with an increase to the GST.

“With something as difficult as this, the Red Sea’s not going to part every time for you on these things and that’s just the reality of life,” he told 2GB in Sydney.

“But we’ll continue to work that through with Cabinet as the Prime Minister said, because that’s where these things are properly, ultimately dealt with.”

Superannuation tax concessions could be in the firing line. Photo: ABC

Mr Morrison added he never viewed the GST as the answer to the Commonwealth’s budget woes but he did see it as the “only opportunity there really is for very big income tax cuts”.

Instead, he said the Government would continue to pursue other ways to deliver income tax relief.

Advocates within the Coalition for lower government spending have welcomed the Prime Minister’s declaration.

Finance Minister Mathias Cormann said he, like the Prime Minister, was also yet to be convinced raising the GST was a good idea.

“Obviously, if we were convinced, we would have made a decision by now,” he told AM.

ACT Liberal senator Zed Seselja said: “I’ve got no doubt that we could win a GST election.

“There will always be people who are nervous about reform, but it’s about whether this is the right reform.

“I think there’s very few ways to implement a GST increase without effectively increasing the overall level of tax.

“I want to see lower taxes rather than higher taxes, and whilst the GST is an efficient tax, if an increase in it leads to overall higher taxes then I don’t think it’s a path we should be pursuing.”

Another MP, who has argued against an increase, told AM the Prime Minister was showing “common sense” and that the community, and in particular older Australians, were “not in the mood” to accept a 15 per cent GST.

Nationals MP David Gillespie asked the Parliamentary Budget Office to model the impact of a 15 per cent GST on almost all consumption, as part of a much bigger set of changes to state and federal taxes.

“I’ve been really pleased with the discussions, and I look forward to hearing more from the PM, but it does sound like there’s a change in sentiment,” Dr Gillespie told AM.

“If you are going to reform away from the dependence on high personal income tax, and company tax and all these counterproductive state stamp duties and payroll taxes, you have to have a broad reform, that’s the point I was making.

“It can’t be tinkering round the edges, otherwise the more things you rule out the less you can actually do to reform.”

– ABC