A SENIOR Coalition MP has called for the Goods and Services Tax (GST) to apply to fresh food.
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Queensland senator Ian Macdonald argued the consumption tax should be broadened to include fresh goods, which were excluded under a compromise deal by John Howard and the Democrats in 1999.
"I will never support an increase in the GST but I think we should extend it to what we originally proposed prior to the 1998 election," Mr Macdonald said.
"I could also support States having a smidgen of income tax. If we want them to run schools and education that seems fair."
A former minister who lost his frontbench spot after the election, Senator Macdonald's call will create another political headache for Prime Minister Tony Abbott, who said his government had no plans to change the GST.
The Grattan Institute estimated last year broadening the base of the GST to include fresh food, health and education would raise an extra $15 billion for the States, though it would be unpopular.
Mr Howard, former prime minister Malcolm Fraser and former Victorian premier Jeff Kennett have recently backed broadening the GST base while Treasury secretary Martin Parkinson has signalled the need for the base to broaden.
Furious State premiers have lashed the government's decision to rip $80 billion out of health and education and accused Canberra of trying to force them to make the case for a GST rise.