More Tasmanians could get federal cash help for living in remote areas, the state government has suggested.
Many residents of King Island, the Furneaux Group islands and the West Coast are eligible for federal tax breaks because of the remoteness of where they live.
Some island residents are eligible for $1173 per year, depending on how much tax they pay.
Low-income residents would not generally get the full benefit.
... it would also be appropriate to consider other regional and remote areas of Tasmania ...State government
Eligible West Coasters get a maximum break of just $57.
The Productivity Commission is inquiring into remote area tax concessions and payments, and will make recommendations to the federal government.
In a submission to the inquiry, the state government said: " ... to recognise and compensate for the hardships of remote living, a universal payment may be more effective and equitable than the current arrangements, which are not available to part-time workers in remote areas who may be below the tax free threshold."
"In reviewing the geographical zones and definition of remoteness, it would also be appropriate to consider other regional and remote areas of Tasmania, including parts of the North and East Coast, as well as those areas of the Central Highlands that are currently excluded from the remote area zone, but face similar challenges around cost of living, access to markets and skills and labour shortages."
The government said there had been little change in the actual level of the zone tax offset over time.
It said that had eroded its real value, "potentially undermining the original intent".
"We look forward to working with the Productivity Commission through this study to identify the most effective, efficient and equitable mechanisms to deliver economic growth to regional and remote Tasmania," Premier Will Hodgman wrote in a letter which accompanied the submission.
The commission's draft report is expected to be released in late August, with the final report due in February.