Tax reform - and, in particular, the GST - will dominate the agenda at a two-day meeting called by Prime Minister Malcolm Turnbull of state treasurers and premiers in Sydney next week.
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The Council of Australian Government meetings, which be held on next Thursday and Friday, will follow the release of the federal government's innovation statement on Monday but before Treasurer Scott Morrison releases his mid-year budget update in a fortnight's time.
At the Thursday meeting, Mr Morrison and federal Treasury secretary John Fraser will lead discussions with state treasurers on a range of options for tax reform, including on work that has been done by his department on raising the rate or broadening the base of the GST.
A proposal put forward by Victoria and Queensland to raise the Medicare levy by a couple of percentage points to swell federal coffers will also be discussed, but Fairfax Media has been told that enthusiasm for a rise in the levy has cooled and options for GST changes will be central.
Mr Morrison will also outline to state treasurers the federal government's view of what options the states have for tax reform such as, for example, the removal of standalone state taxes such as stamp duty on insurance, which raises about half a billion dollars annually and is considered an inefficient tax.
And while the GST will be central to the discussions, the Treasurer played down the significance of Fairfax Media revealing former treasurer Joe Hockey had presented a sweeping plan reform of the tax system, including modelling of a rise in the GST from 10 to 15 per cent, to Tony Abbott before the change of leadership.
Mr Morrison said he had already presented that work to state treasurers.
"As I've said at numerous press conferences there was modelling done based on the request from the states and territories to model those outcomes. I presented that at the last meeting of state treasurers to those state treasurers in response," he said.
"It's been hiding in plain sight in press conferences and in the Parliament. So, I don't think there's anything terribly revealing about that. The difference is we did that in response to a request from the states."
The draft copy of the COAG agenda sent to state premiers for the subsequent Friday meeting lists "a new dialogue for economic reform" as the first item of business.
That means, in effect, that tax reform will be top of the agenda for both days' meetings.
Reducing the incidence of domestic violence, tackling ice addiction, the federation white paper, countering violent extremism and Indigenous economic development are the other five items listed for the meeting between Mr Turnbull and state premiers.
South Australian Premier Jay Weatherill recently unveiled a radical tax reform proposal that would see the GST rise to 15 per cent, with that money to flow to the federal government, with states to be handed 17.5 per cent of federal income tax revenue.
