Malcolm Turnbull's state taxes plan seemed like yet another policy bubble. It seemed impulsive, not sure and steady government. Rather like you-know-who, writes Peter Brent.

The Coalition is the strong favourite to win this year's federal election, but Malcolm Turnbull is doing his best to even the contest.

How else to explain the Prime Minister's suddenly announced plan, ahead of Friday's COAG meeting, to return income taxing powers to the states?

Again seemingly leaving his Treasurer out of the loop, helping make him look dopey.

In February the Labor Opposition unveiled a campaign promise to tackle the high cost of housing. It may or may not have constituted sound policy, but it was and remains politically dumb to take a big fat target to an election.

Now Turnbull is returning the favour.

That vertical fiscal imbalance is a problem in our federal system is widely recognised. The revenue-raising tools of the states and territories don't come close to covering spending in their areas of responsibility, so the Commonwealth doles out money to make up the shortfall. It's inefficient and generates ritualistic state-commonwealth arguments.

It also leads the states and territory to double down on their few taxing opportunities, and is, for example, the main reason Australia ranks so highly in poker machines per capita, with all the consequent damage.

Ideally we might get rid of the states altogether and further empower local governments, but that can't happen without a referendum, which means it can't happen.

Bob Hawke, in his fourth term as prime minister, moved towards returning income taxing power to the states (taken away, with compensation, during the second world war) but his successor Paul Keating was not interested. If Turnbull believes he is the person to tackle this problem, then early in the Government's second term would have been a fine time to bring the topic up. A discussion with cool heads might have unfolded.

But it's political madness to take such a large, complicated change, involving the emotive "t" word, to the ballot box.

The dollars collected by the GST, which account for about 15 per cent of the Commonwealth tax take, go to the states and territories. Roughly the same amount again flows in the same direction in Commonwealth grants, the largest components of which are in health and education.

Under Turnbull's plan, the states would levy income taxes to replace those grants, and commonwealth taxation would correspondingly recede. Then, as the Prime Minister points out, if (after a few years) one of them wants to spend more on hospitals and schools, and can't find the savings elsewhere, they will need to raise income tax and be answerable for that to their constituents.

That sounds fine, except these arrangements would surely, like the GST, require a fiddle to compensate the states and territories with low per-capita income (which would certainly include South Australia and Tasmania for the foreseeable future).

So we'd still have some form of grants, or the compensation would, like the GST, be shaved off the income tax of the wealthier states, which would double the bellyaching quotient, particularly from Western Australia.

If this policy had emerged on the Labor side, one would reasonably conclude it originated in the bowels of Sussex Street, from apparatchiks spouting the latest findings of what the voters say they want.

Mate, you can imagine the machine-folks lecturing the leader, your numbers are slipping, the punters tell us they want you to stand for something. And the commentators are nagging for a tax policy to take to the election, we'd better give them one.

Perhaps the outsourcing of political strategy to focus group ailment has jumped the party corridor.

As well, some election manuals recommend picking fights on the way to re-election, and states and territories are generally up for a stoush.

Perhaps the idea is that COAG will run a mile from it and the whole thing can then be dropped. But that would still provide ammunition for the Opposition during the campaign: Malcolm Turnbull wants the states to start taxing your income.

Yet another Government policy bubble must disconcert the semi-engaged voter. It seems impulsive, not sure and steady government. Rather like you-know-who. And not only Tony Abbott, but Kevin Rudd and Julia Gillard.

What is the office of prime minister doing to its occupants these days?

The worst news for the Government would be if this was an attempt to replicate John Howard's 1998 re-election. As a rule, trying to repeat the received accounts of past events is a recipe for malfunction.

In this case, Howard's GST announcement in September 1997 saw his and his party's polling numbers fall through the floor. They recovered somewhat once the detailed package was released the following July, but his government was re-elected despite taking this unwanted complicated new tax - albeit in a revenue-negative package - to the electorate.

Whatever drove this week's taxation developments, you can bet Bill Shorten can't believe his luck.

Peter Brent is a writer and adjunct fellow at Swinburne University. Visit his website and follow him on Twitter @mumbletwits.