Mike Baird

Proposals were attacked ... NSW Treasurer Mike Baird.

RELATIONS between the state and federal governments over tax reform have hit a new low after the Assistant Treasurer, David Bradbury, attacked proposals aired by the NSW Treasurer, Mike Baird and others as ''ridiculous''.

Mr Baird and his South Australian counterpart, Jack Snelling, have been asked by the Treasurer, Wayne Swan, to produce an options paper for tax reform to be delivered next month.

The state and territory treasurers met on Thursday to discuss several ideas, including that the Commonwealth consider reducing the GST-free threshold on online purchases to below $1000, to generate more tax that could be distributed to the states.

They also want the Commonwealth to consider allowing them to keep federal taxes that are paid by newly privatised state assets, such as power stations. This would replace the loss of tens of millions of dollars in ''tax equivalent payments'' and dividends they receive from corporations when they are state-owned.

Thirdly, they are proposing that the Commonwealth return to them extra income tax earned through ''bracket creep'' in return for the partial abolition of state taxes such as stamp duty on property.

After the meeting, Mr Baird and Mr Snelling issued a statement saying the treasurers were ''committed to improving revenue certainty for the states'' and the ideas would be taken to their respective cabinets for approval.

But Mr Bradbury responded with an attack on the treasurers and Mr Baird in particular.

He said in 2012-13 the states would receive about $90 billion in GST and special purpose payments for health and education.

''There is plenty of scope for states to reform their own taxes without additional Commonwealth assistance,'' Mr Bradbury said.

''I would've hoped people like Mike Baird would have more of a backbone for reform than this, but it's disappointing that it looks as though he'll keep shirking the hard decisions.

''If this is the best that they've been able to come up with, then it's no wonder Mr Baird ended up losing $1 billion in his own budget,'' he said.