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Prime Minister Tony Abbott says he would prefer to raise the GST than the Medicare levy as the states and territories agreed that more revenue needed to be raised through taxes.
Mr Abbott fronted the media at the end of the meeting of the Council of Australian Governments, along with all state premiers and chief territory ministers.
He stressed that no decisions had been made about which taxes would be raised, saying a range of options were being considered.
"All of us have preferences, and my preference would certainly be for consideration of GST issues, rather than for consideration of a simple increase in the Medicare levy, because just increasing taxes is hard to see as reform," Mr Abbott said.
"If the tax mix were to be changed in ways that make our economy more efficient and more productive, that increases incentives ... that would strike me as something that could well be described as economic reform."
NSW Premier Mike Baird suggested raising the 10 per cent GST rate to 15 per cent on Tuesday.
Preliminary modelling that Mr Baird presented the meeting on Wednesday showed that doing this without broadening the GST base would raise an extra $36 billion by 2020.
But after households earning below $100,000 are fully compensated for the rise and those earning between $100,000 and $155,000 receive back half the increase, the revenue boost would be $18 billion and still fall billions of dollars short of the revenue that modelling suggests is needed to cover escalating national healthcare costs.
Mr Abbott said he was pleased Mr Baird had raised the proposal, saying the GST was a "joint exercise" by the Commonwealth and the states "whereas the Medicare levy is simply a Commonwealth tax, so that's why [it is] my preference."
He would not rule other options out, saying it would take time to think through reforms.
"Whatever the outcome ... we do need to keep faith with the public, and springing tax changes on an unsuspecting public, however arguable they might be, is not a way to build the kind of trust and confidence that we need to see more of in our democracy."
Queensland Premier Anastascia Palaszczuk reiterated her personal opposition to increasing the GST, saying any tax reform "must have the mandate from the Australian people".
"I personally do not support an increase in the GST [there is also an] option there about increasing the Medicare levy but we were able to have a full and frank debate, keep both options there for further work to happen."
