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A trio of respected former Labor premiers has put political pressure on Bill Shorten, backing a GST rise from 10 to 15 per cent subject to certain conditions.
In comments that could create a headache for the Opposition Leader and will be welcomed by the Turnbull government, former NSW premier Kristina Keneally, Queensland's Peter Beattie and Western Australia's Geoff Gallop have all outlined the conditions under which the tax change could be implemented as part of a reform package.
The Turnbull government is modelling a rise in the GST as part of a tax reform package.
But two other former NSW Labor premiers, Bob Carr and Nathan Rees, backed Mr Shorten and federal Labor's stance, with the party so far staking out a "no change" position on the consumption tax.
That stance has set up a clear contest with the Coalition government and placed the issue at the centre of political debate in recent weeks, and ahead of next year's federal election.
Malcolm Turnbull has thus far promised any prospective tax changes would not disadvantage the most vulnerable Australians as he and Treasurer Scott Morrison have left open a raft of tax reform options on the table.
Mr Beattie, who won four elections for Queensland Labor and was at the table as Premier when John Howard introduced the GST, said he had been adamant at the time the rate should not rise.
But 15 years later, he told Fairfax Media that Australia's tax system needed major structural change that spurred innovation and productivity growth.
"This extra five per cent has to go to health and education, I will have trouble supporting an increase beyond 10 per cent unless it goes to service delivery for the states," he said.
"It should also be linked to competition reform and be innovative, it has to be a total package that includes ways to stimulate the economy."
To that end, Mr Beattie suggested business tax breaks should be in the mix, rather than personal income tax cuts which "we all know bracket creep will pull back".
Ms Keneally urged federal Labor to engage in a constructive manner in debate about reform of the federation and the tax system and that "the GST is obviously part of that mix, though Labor shouldn't give in to a simplistic view that increasing consumption tax fixes everything".
"My support for a rise in the GST is conditional on three things. Fixing a flawed federation, dealing with incredibly generous tax concessions provided to the most well-off and ensuring we don't ask those who can least afford to pay to bear a disproportionately higher tax burden," she said.
And Mr Gallop, who led Western Australia for five years, said: " I've been on the record for some time talking about need to increase the GST, I think the time has come to take that step."
" In any economy you need a balance of direct and indirect taxes, there is no doubt that our international position vis-a-vis taxes such as the GST is restricting the capacity to do things. I wouldn't necessarily say that this should be coupled with lower income taxes, my position is it should simply rise," he said.
Mr Carr said federal Labor "should oppose the proposed increase in the GST, 100 per cent".
He mocked the "geniuses of Australian business" because "after endless discussion and conferences, articles and reports, the pro-business element in Australian can come up with one single reform – a lazy old hike in the GST".
Like Ms Keneally, Mr Rees said reform of the federation should be the government's top priority, with state governments reduced to a " a regulation, monitoring and planning role and duplication should be removed".
Instead of a rise in the GST, Mr Rees said he would "like to see big companies paying their fair share. Until that point why would anyone support increasing GST?"
