In an ACT government submission to a federal inquiry into the redistribution of Goods and Services Tax for state and territories, Andrew Barr said changes should not be made lightly.

"That said, I also recognise a strong impetus for changes to the system," Mr Barr said in the submission.

The inquiry was set up last month to examine proposed federal changes to horizontal fiscal equalisation - the term describing how GST is distributed to the states and territories based on their needs and population.

The ACT receives $1.16 for every dollar in GST revenue compared to Western Australia which gets just 47c in the dollar.

It's estimated under the changes the ACT will receive an extra $46 million in GST revenue, while WA will stand to benefit with a $4.7 billion top up.

Legislation introduced to parliament recently would see states receive no less than 75c in the dollar for GST revenue.

However, some state leaders have hit out at the $9 billion reform, fearing they would be left worse off.

Previously, state and territory governments have called for a guarantee that no jurisdiction would be made worse off during the transition period, and Mr Barr said this was a key priority.

"The ACT government's view is that the no worse off principle should not be seen only as a feature of the transition process, but rather as fundamental to a better system of equalisation," Mr Barr said.

The territory government has also called for the principle to be enshrined in legislation.

However, the ACT government said while many had seen cause for change, the current system had been working as intended.

"The claim that the current equalisation system is broken has been made by a variety of commentators and political leaders," the ACT government submission said.

"This view is not shared by the ACT government. The ACT government has consistently taken the view that the current system works well and a strong case for wholesale change has not been made.

"We consider that the system has worked largely as intended, though no-one could have envisaged that the differences between the fiscal capacities of states would become as large as they did at the peak of the mining boom."

The government also warned the federal inquiry that a lack of a legislated guarantee would leave state and territories facing a significant financial risk in the future.

Among other recommendations, the ACT government said a review of the system once implemented was needed.

"It will be essential that the Commonwealth government undertake genuine consultation with the states and territories on the term of references for that review."

The government inquiry is set to report its findings on Thursday.