The Federal Government would raise $130 billion in 2017-18 if it increased the GST to 15 per cent and dramatically broadened the tax base, according to new figures from the Parliamentary Budget Office (PBO).

Key points: Adopting a New Zealand-style GST would raise $130 billion in 2017-18

Adopting a New Zealand-style GST would raise $130 billion in 2017-18 Change would see GST raised to 15pc, tax base broadened

Change would see GST raised to 15pc, tax base broadened Nationals MP David Gillespie says change could allow for inefficient taxes to be cut

Nationals MP David Gillespie asked the PBO to model a New Zealand-style GST after it was suggested to him by his constituents in northern NSW as a way to help end funding disputes between the Federal Government and states and territories.

"It's not part of a coordinated program, I just got off my butt and did this myself, because I want my people in the Lyne electorate to get their voices heard in Canberra," Dr Gillespie told the ABC's AM program.

"We should discuss a lot of these issues upfront and centre with the electorate and tell them the options, and tell them what the problems are."

The current 10 per cent GST has a range of exemptions, including basic food, health and education services, but in New Zealand, it covers a much larger share of consumption.

"They seem to be going from strength to strength in their economy," Dr Gillespie said.

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"They have it applying to about 97 per cent of consumption in their country and we only have it on 47 per cent.

"They have it at 15 per cent, we have it at 10 per cent."

Inefficient taxes abolished in return for GST hike: Gillespie

Dr Gillespie said the PBO calculated that changing the GST to a New Zealand-style model would generate $65.6 billion in additional revenue in the 2017-18 financial year, bringing the total revenue to more than $130 billion.

He said that, in turn, could pay for a range of benefits requested by his community.

"I'm not advocating just a tax grab. We've got to put our income taxes down, our small business taxes down, we have to fund roads and infrastructure in the regions more," Dr Gillespie told AM.

"In my part of the world, I have an awful lot of pensioners and people on low fixed incomes and there will be a [consumer price index] increase with this, so we need to compensate them, and increase the base rate of their pension."

If the Government adopted Dr Gillespie's plan, it would represent a radical restructure of the way the Commonwealth interacts with the states and territories.

Dr Gillespie said in return for the increased revenue from the GST, funding agreements between the Commonwealth and the states and territories worth about $50 billion could be abolished, and inefficient state taxes should also be cut.

His suggestions include reducing personal income tax, abolishing state payroll tax and cutting the small business tax to 25 per cent.

"We do have big challenges in our federation, but everyone wants the incentive to work harder and not be taxed, so bracket creep is an issue," he said.

"People put their lives and souls into small businesses and to be paying payroll tax and high company tax defeats the purposes of all their efforts."

The Federal Treasury has already modelled a series of changes to Commonwealth taxes like the GST, and is now doing similar work on state taxes as part of the Government's policy development through the federal and tax white papers.

In a statement, Treasurer Scott Morrison said they were looking for "the best mix of options that are going to encourage jobs growth and economic growth".

Dr Gillespie said state and territory leaders should be attracted to his plan because it would give them a "reliable funding stream".

Speaking from Papua New Guinea during his tour of the Pacific, Opposition Leader Bill Shorten said he was prepared to fight the Government if it moved to increase the GST.

"I don't believe reform in this country should have to be paid for by people paying extra in their GST, I think there are other ways of making this nation function better," Mr Shorten said.