A Legislative Council select committee is inquiring into the impact of the system of Commonwealth GST distribution as to how it applies to Tasmania's expenses and the delivery of services.

At a hearing on Monday, Murchison Independent MLC and commitee chairwoman Ruth Forrest questioned representatives from the Department of Treasury and Finance about how revenue raised from new gaming licenses would impact the assessment of Tasmania's GST.

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Intergovernmental and financial policy branch assistant director Damien Febey said if changes were to be made to the tax rates for gambling it would not affect the GST outcome.

"If you raise more from gambling taxes it doesn't change our GST outcome because it is treated equal," Mr Febey said.

Ms Forrest also questioned the practice whereby some Commonwealth Grants are chosen to be quarantined from being subject to GST.

"How is it significant money, such as with the Royal Hobart Hospital rebuild, was not subject to [state] consultation?" Ms Forrest said.

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Economic and financial policy deputy secretary Fiona Calvert said such matters are effectively negotiated with the federal treasurer.

"Treasury's preference is for payments not to be quarantined. Then you end up with a situation where all the states are pushing for their payments to be quarantined," Ms Calvert said.

The committee questioned how the impact of large Commonwealth grants, such as funding pledged during an election campaign, was assessed.

"There are processes which effectively require all agencies to take into account the GST impact of any Commonwealth payment," Ms Calvert said.

"It might help to avoid deals being done for funding that can undermine the system."