The federal government says it has not ruled in, or out, any changes to Australia's taxation system, including the Goods and Services Tax.
Prime Minister Malcolm Turnbull says the federal government is committed to tax reform, despite being personally unconvinced on the merits of increasing the GST to 15 per cent.
But those comments have attracted criticism from business groups and some state leaders.
Prime Minister Malcolm Turnbull says all options for tax reform are being considered - including cutting negative gearing, superannuation tax deductions and limiting annual tax deductions in return for lower tax rates.
And he insists a proposal to increase the Goods and Services Tax from 10 to 15 per cent could still be an option.
"The argument in favour of this, in terms of the economic efficiency, is that taxes on income apply to income that is both consumed, spent -- and that is why there is an argument that a tax mix switch provides an economic benefit. As I have said, the Government is not yet persuaded that in the context of Australia today, such a tax mix switch would give an adequate growth, adequate improvement in economic activity."
Federal Treasurer Scott Morrison says discussion is ongoing, but he still sees a GST increase as the best way to deliver personal income tax cuts for Australians.
"Wherever this Government is able to properly and ably deliver support for those Australians who are working and investing, for those Australians who are earning every day, Mr Speaker, not just receiving every day, but earning every day -- we will always seek to ensure we leave no stone unturned, to ensure we can provide them with support."
Labor leader Bill Shorten says the Prime Minister and Treasurer are reacting to the threat of a backbench revolt over the issue.
"The Liberals have made massive cuts to the funding of the education of our children in all schools in Australia, to the treatment of sick people throughout Australia by massive cuts to hospitals. But now he is proposing - having realised that his 15 per cent GST idea is deeply unpopular within the Australian electorate -- he is now turning his attention to the superannuation payments of 9.5 million people who go to work every day."
South Australia's premier, Jay Weatherill, says the federal government needs to explain how it will fill the hole left by the $80 billion cut to the states' health and education budgets.
The cuts were confirmed in the 2014/2015 budget, reversing a Labor government funding pledge.
The Business Council of Australia warns there is no hope of delivering personal income and corporate tax cuts without a higher GST.
Speaking to the ABC, chief executive Jennifer Westacott says there needs to be a broader discussion on tax reform.
"And in our view the point of tax reform is to grow the economy faster by changing the incentives for business, changing the incentives for individuals. Then the question becomes how do you fund substantial changes to income tax, substantial changes to business tax. And that is where the GST comes in, and that's where the trade-offs come in, can we get the compensation right, can it make the kind of transformative changes to our tax system."
