A senior Coalition MP has called for the GST to be extended apply to fresh food.
Queensland senator Ian Macdonald has argued the goods and services tax should be reformed to include essentials such as fresh food.
Since the GST was introduced in 1999 fresh food, health and education have been exempt.
But federal cuts to state health and education funding have raised debate about a hike in the GST which bring extra revenue for the states.
The Abbott government has been accused of blackmailing premiers and chief ministers into lobbying for a change.
Coalition members have questioned the government’s pre-budget strategy as the party was hit with voter anger.
”I will never support an increase in the GST but I think we should extend it to what we originally proposed prior to the 1998 election,” Mr McDonald said.
”I could also support states having a smidgen of income tax; if we want them to run schools and education that seems fair.”
The Grattan Institute estimated last year that, though politically unpopular, broadening the base of the GST to include food, health and education would raise an extra $15 billion.
Mr McDonald’s calls come as former Victorian Premier John Brumby urged state and territory leaders to make a “courageous” push for a hike in the GST.
Mr Brumby, who chairs the soon-to-be-abolished COAG Reform Council, said GST reform was inevitable and “looks more and more like the best option that we’ve got”.
“The real debate is about the nature of the increase,” he said in a speech at Melbourne University last night.
“Is it base? Is it rate? Is it both?”
Compensation for low income earners and pensioners also needed to be considered, he said.
Mr Brumby admitted that lobbying for a GST hike would be a “courageous” and “difficult” decision for premiers to make.
“If I was a state premier I think I’d be putting up my hand to say `I’ll have the GST, thank you very much’,” he said.
Liberal backbencher Angus Taylor has also challenged premiers and chief ministers to argue for a GST hike, if they want to make up the $80 billion lost in health and education funding.
“It’s going to require a significant increase in the GST to deliver that – maybe three, four, five per cent,” Mr Taylor said.