Prime Minister Scott Morrison has pushed tax reform back onto the states as NSW leads calls for major changes.
NSW Treasurer Dominic Perrottet has publicly floated increasing the GST, abolishing stamp duty and overhauling payroll tax.
Mr Morrison said the states needed to agree on changing the GST before the federal government would consider it.
He is also steering clear of helping the states switch from stamp duty to land tax, believing they can do it themselves.
“State taxes are a matter for state governments and so it is important if states wish to make changes in that area that they form a common view about what they would like to see happen,” Mr Morrison said on Monday.
“Otherwise, you can distract yourself from other important priorities by going down a path that may lead absolutely nowhere.
“So I think it’s important in the first instance for states and territories to be clear about what they want to do and how they would seek to make changes.”
Mr Morrison has asked Treasurer Josh Frydenberg and his state counterparts to develop tax reform proposals for national cabinet to consider.
“It’s for them to reconcile that amongst themselves,” he said.
When the GST was introduced in 2000, some states dragged their feet axing other taxes in exchange.
“Last time around, when there was reform in this area, I think there was some scepticism that followed with the time it took for many of the state taxes to go when the GST was introduced,” Mr Morrison said.
“I think that’s an issue that needs to be addressed in the community. I think people would need some confidence that there would be change there.”
The prime minister has made his views clear to the premiers.
“If there are changes they want to make, that their treasurers want to make, they need to get together and they need to sort that out and they need to present a united position that we could actually move forward on,” he said.
“But in the meantime, I won’t be distracted from what we can do in our own budget, in our own tax system, to ensure we can drive the investment that is necessary to create the jobs that are necessary.”