Chief Minister Andrew Barr will support calls for an increase to the Medicare levy at this week's meeting of state and territory leaders, and has not ruled out an increase to the goods and services tax in the mix of tax reforms.
Mr Barr said any increase in the goods and services tax would need to be in the context of a "dramatic increase" in compensation, especially for people on low incomes.
NSW Liberal Premier Mike Baird called for an increase in the GST from 10 to 15 per cent this week, ahead of the leaders' retreat on Wednesday, sparking a chorus of calls from other leaders for tax increases to pay for higher health costs.
Mr Barr said Mr Baird should be "commended for his courage" in recognising the need for higher taxes to pay for health. But the push for a higher GST was hypothetical, given the need for unanimous agreement across the states and territories and bipartisan support federally.
"That's not my starting point, my starting point is to see reform to a number of other taxes before we go to the GST," he said.
"... We need to raise more revenue for growing health costs, that is agreed and understood across the political divide."
South Australian Labor Premier Jay Weatherill said he was open to a GST discussion, but given the GST placed the highest burden on the lowest income earners, the leaders would need to "find a way of grappling with that".
Victorian Labor Premier Daniel Andrews is pushing instead for an increase in the Medicare levy.
Mr Barr is also looking to the Medicare levy.
"The idea of an increase to the Medicare levy is worth pursuing if that can be directly hypothecated into increased funding for Australia's health system," he said, confident that the public would support tax increases to pay for health.
He supported a GST exemption for women's sanitary items, recouped by extending GST to digital downloads and imported goods bought online, currently exempt for amounts less than $1000.
He also wants the Commonwealth to pay payroll tax. The Commonwealth doesn't pay tax on the payroll for its 160,000 public servants and Mr Barr said if it did, it would make a big difference to state and territory coffers, especially in the ACT, where he estimates the ACT would have gained an extra $460m in payroll tax in 2014-15.
The states and territories have lost billions in health money over the coming years after the Abbott government tore up an agreement reached under the Gillard government. ACT Health Minister Simon Corbell estimates a shortfall of $600 million over the coming decade.
Mr Barr said the tax system must be "fairer and more efficient" and sustainable in the long-term.
"I wouldn't support a 50 per cent increase to a regressive tax like the GST without a lot of other measures to support low income families. There are many other means, like an increase to the Medicare levy to address health funding shortfalls. These should all be discussed."