Prime Minister Malcolm Turnbull has been publicly warned by members of his own party about cutting tax breaks for property investors, with backbenchers voicing fears of a voter backlash.

Liberal senator Zed Seselja said “there would be significant concern” among his backbench colleagues if Mr Turnbull changed negative gearing rules.

“We should tread very cautiously in the area of negative gearing,” Mr Seselja said.

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The free advice came as Mr Turnbull quashed fortnight-long rumours that the Goods and Services Tax (GST) would be increased to 15 per cent in the May budget.

However, he was silent on negative gearing and superannuation reform that remained on the agenda as part of the tax reform package.

Mr Turnbull said on Tuesday he was looking at every aspect of negative gearing, but he wouldn’t be mimicking Labor’s “badly designed” proposal to restrict it to new properties.

“The idea that this is a massive rort for the rich is simply not right,” Mr Turnbull said.

Treasurer Scott Morrison had been hinting towards the changes he wanted to make to tax breaks for Australians who invested in property.

Mr Goodenough said business people in his electorate raised concerns with him personally. Photo: AAP

Meanwhile, West Australian Liberal backbencher Ian Goodenough said business people in his electorate – “people who work, save and invest” – raised concerns with him over the weekend about the impact negative gearing changes would have on confidence.

South-western Sydney Liberal MP Craig Kelly said he was worried changes to negative gearing would push up rental prices and make it even harder for people to save to buy a house.

“We need to remember sometimes when we play with these taxes they have a lot of unintended consequences,” Mr Kelly told the ABC.

“Rather than tinkering at the edges and trying to tinker with taxation policy or something here and there, the simple fact is there is just not enough supply.”

Townsville-based Federal Liberal MP Ewen Jones said negative gearing was a big issue in his electorate.

“We have a 40 per cent rental market here,” he told the ABC.

Mr Jones said he would support changes to curb the excessive use of negative gearing, but wanted it based on sound modelling.

“If we can come down with a sensible limit on a dollar amount or a number of properties you can have, that benefit the community, that’s where you’ve got to end up,” he said.

Libs, ALP both warned against ‘playing around’

On Saturday, Opposition Leader Bill Shorten proposed changing the law so that from July 2017 only new properties would be able to be negatively geared.

Mr Turnbull attacked Mr Shorten’s plan as badly designed, but said the Coalition was also considering changes to negative gearing rules.

The government will have to deliver some sort of tax reform package by May. Photo: AAP

Property Council chief executive Ken Morrison warned both sides of politics against “playing around” with negative gearing for a part of the economy that was providing economic growth and jobs.

“We have seen it in the past where governments at the state and federal level have made significant tax changes, claimed it’s targeted, claimed it’s well modelled and in fact it has had major impact,” he told Sky News.

Meanwhile, welfare group ACOSS had been calling for reform to negative gearing for some time, saying it was a “major distortion of people’s investment decisions”.

Instead, ACOSS in its pre-budget submission called for a tax incentive to encourage institutional investors into the affordable housing market to build up stock.

In its budget submission, the Minerals Council of Australia called for a phased reduction in Australia’s corporate tax rate, that remained at 30 per cent for big business, to make the tax system more globally competitive.

The chief executive of biotechnology giant CSL Paul Perreault agreed.

“If you want to attract new industries and jobs and to create top-rate manufacturing facilities then I think you have to be competitive with the people that seem to be getting more of the play,” Mr Perreault said.

PM rules out GST hike

Earlier on Tuesday, Mr Turnbull backed away from criticised whispers that the government would raise the GST to 15 per cent at the May budget.

Until now, the PM had refused to rule out the plans since 2015, as part of the government’s tax reform package.

“I can assure you that the government will not be taking a proposal to increase the GST to the election,” Mr Turnbull told reporters in Rockhampton as part of his four-day tour of Queensland on Tuesday.

Treasury modelling released last week showed that increasing the GST did not give the economic growth dividend people had assumed it would.

“Somewhere between nil and very small,” Mr Turnbull said at the time.

The Federal Opposition has been campaigning hard against any potential increase, with Mr Shorten calling on the Prime Minister to rule out the option earlier on Tuesday morning.

– with AAP