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Liberal senator Cory Bernardi says he is prepared to cross the floor to oppose a rise in the GST if Prime Minister Malcolm Turnbull and Treasurer Scott Morrison push ahead with the change.
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'Bedwetters' threaten tax reform
Some Liberal backbenchers are getting cold feet on the GST, posing problems for Malcolm Turnbull and Scott Morrison. Analysis with James Massola.
And Institute of Public Affairs executive director John Roskam, an influential free market think-tank, has lashed a prospective GST rise as "bad policy" and predicted it will be dropped.
Senator Bernardi declared his intentions after Fairfax Media revealed on Wednesday that a backbench revolt was brewing over potential changes to the consumption tax, which the government is considering in the context of a broader reform package that would likely also see income taxes cut.
ReachTEL polling has found voters remain strongly behind the Turnbull government - with Labor's primary vote dipping below the 30 per cent mark - but strongly opposed to a bigger GST.
The disquiet on the Liberal backbench centres on two groups of MPs: political hard heads who are small government advocates and a second group, nicknamed the "bedwetters" by some Liberals, who fear Labor's scare campaign on the GST.
Senator Bernardi told Fairfax Media he believed colleagues were "keeping their powder dry" over a possible GST rise until the tax package was released.
"But I also know there are colleagues who say they will never ever vote for an increase in the GST," he said.
"Australians pay too much tax already, we need to live within our means and that means government needs to as well. Every proposal I've heard about for tax reform has seen tax revenues increase for government, that's not reform, that's gouging."
Asked if he was prepared to cross the floor and vote against his own government to oppose a GST rise, Senator Bernardi said: " I am always prepared to act in what I consider the best interests of the country, I'll stand for good policy and stand against bad policy and if that means crossing the floor to express my unhappiness with policy, of course I'm prepared to do that."
"Ultimately tax packages have to be considered in the whole, but I just cannot see a circumstance where an increase in the GST is in the long term interests of taxpayers."
Mr Roskam, who is closely aligned with the economy dries in the Liberal Party, said there was significant concern on the backbench about a GST rise.
But I also know there are colleagues who say they will never ever vote for an increase in the GST
"The fact that the PM and Treasurer are spending political capital talking about raising taxes rather than cutting spending is frustrating economic liberals and 'the base' of the Liberal Party. They should drop it now and the chances are 99 per cent that they will," he predicted.
Mr Roskam praised Mr Turnbull and Mr Morrison for allowing a free-flowing debate on tax reform - unlike their predecessors Tony Abbott and Joe Hockey - but said it was time to close the door on a GST rise.
"The economic challenge is reducing the size of government and that's the communication task, not raising taxes," he said.
Trade Minister Andrew Robb down played reports of dissent on the backbench on Thursday, saying his colleagues understood that there were several options on the table.
"I was in the party room on Tuesday and I don't think the GST was raised and I think this was because all the colleagues know that nothing has been decided," he told ABC radio.
Mr Turnbull effectively pre-empted discussion about the GST on Tuesday, telling colleagues - as he has said publicly - that no decision has been taken on whether to proceed with a rise in the consumption tax, and that everything remained on the table.