It seems all but certain that sometime between now and the middle of March the Turnbull Government will officially rule out lifting the Goods and Services Tax (GST), ABC's Chris Uhlmann writes.

In March, the Commonwealth and the states and territories meet again to talk tax and by then it will be obvious to all — as, frankly, it should be now — that consensus is impossible.

That will not spell the end of the tax reform debate, it may well morph into giving the states a percentage of income tax receipts in return for handing back some of the GST.

It will, most likely, include cutting superannuation concessions to the wealthy.

But none of what happens afterwards will be as ambitious, given lifting the GST raised the biggest pot of money with which to conjure a change to the tax mix that is less of a drag on growth.

Many will claim victory for killing a GST hike. Labor holds a smoking gun but, ironically, will claim the corpse is not dead, only sleeping.

Some Coalition backbenchers will want credit and declare the body utterly dead, buried and cremated.

But those most responsible will be the premiers and chief ministers. The states are divided on lifting the GST and those that support it are on a completely different page than the Commonwealth over how the money should be spent.

New South Wales and South Australia are arguing for a tax hike to pay for more spending on health and education.

The Commonwealth has no intention of giving the states more money from the GST to pay for more services, convinced they have not done enough to raise their own revenue or cut spending.

The Commonwealth wants any money raised directed to tax cuts, to lift the burden on average workers who are being forced into the highest tax brackets by inflation.

Given that is a "drop dead" position of the two sides, arguing for change then no change is possible.

The Turnbull Government tax agenda was always about cutting personal and company tax rates. Lifting the GST would have raised over of $30 billion a year.

There have been claims that up to half of that would have to be handed straight back as compensation, but Treasury was working on a much lower number of about $8 billion.

With that, and some other pots of revenue, the Treasurer Scott Morrison hoped to be able to offer a package of significant personal income tax cuts and other significant reform that would have excited his colleagues and the public.

The Treasury modelling on the growth dividend for the shakeup was modest, but with Australian growth now locked at just 2.5 per cent any improvement would be welcomed.

Howard government must bear responsibility

One of the arguments for changing the tax mix that has had little airing to date is that the idea of "fairness" is a one-way street, only ever framed around the interest of welfare recipients and not contributors.

There is a view in Government that no one has yet properly made the case about the lack of fairness in sucking ever more money from the pockets of middle income taxpayers to pay for an ever burgeoning welfare state.

Since 2000, welfare has grown and the tax take has fallen. Average income earners are picking up the tab that equation cannot last forever.

Behind their hands some in the Coalition now whisper the once unthinkable, that the Howard government must bear some responsibility for the rise of an unsupportable welfare state.

Some believe that John Howard turned the aspirational "Howard battlers" into welfare dependants who are now much more likely to drift back to Labor and the Greens at the ballot box.

Finally, there is no doubt that the GST debate has tested the young relationship between Malcolm Turnbull and Mr Morrison, as the Treasurer ran harder on change than the Prime Minister.

But there is no evidence yet that the relationship has been damaged or that disavowing a GST will do any great harm to the Government.

But, given the outcome is inevitable, it would seem that an orderly retreat would make sense sooner rather than later.