THE state's peak industry body says the federal government should show leadership and not shy away from a GST increase simply because it's unpopular.
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Prime Minister Malcolm Turnbull has said an increase of the GST to 15 per cent is not locked in, and that he "remains to be convinced" that raising it and providing income tax relief would be the right mix.
Despite Mr Turnbull giving the strongest indication yet that the government has shelved plans for a rise in the consumption tax, Treasurer Scott Morrison said on Monday that "you just don't write things off carelessly and politically".
Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey said it was essential GST remained a part of the tax reform debate.
"I would like to see it left on the table for discussion," Mr Bailey said.
"I think that what we've got is a fear of even talking about it, because clearly it's not necessarily a popular thing, rather than true leadership."
Mr Bailey said from a business perspective the GST was the most efficient tax.
"There are times when our leaders need to make decisions that aren't popular but are the right thing for our country," he said.
Speaking from Launceston, Australian Council of Social Service chief executive Cassandra Goldie said there was no strong economic case for a hike in the GST and it "wasn't a fair way to do tax reform".
"I think we'll still be having a debate about the GST but I certainly welcome the Prime Minister's acknowledgement that there's not the compelling case that some others say there is to lower income tax and pay for that with a higher GST," Ms Goldie said.
"If we're serious about equity across the country, we need to make sure that states like Tasmania, which clearly doesn't have the same kind of capacity to raise revenue as some of the richer states, do have the ability to get resources from the Commonwealth."
Bass Liberal MHR Andrew Nikolic said the tax task was to generate growth and provide incentives to work.
"I have consistently said that the tax discussion we are having with the Australian people is about much more than the GST," Mr Nikolic said.
Franklin Labor MHR Julie Collins said the government appeared to be "riddled with internal division" when it came to the GST.
"Tasmanians have sent a clear message that they don't want a 15 per cent GST on everything and Labor has listened," Ms Collins said.