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CANBERRA, Nov 15 AAP

November 15 2012, 12:39AM

Key independent MP Rob Oakeshott says Australia's tax system needs fixing to ensure the nation's standard of living does not decline.

Mr Oakeshott has called on the government for a review on the tax system, including the goods and service tax (GST), to help pay for future social programs and also reform benefits to business and the middle class.

Mr Oakeshott says Australia has too many taxes, yet the government's revenue base is eroding.

"Unless we do reform with a purpose of a payoff, we are going to lessen our standard of living for all Australians in the future, Mr Oakeshott told AAP on Thursday.

"And I don't want to be a party to that. I want to be someone who is pushing for the best standard of living for all Australians, so that means an urgent look at the tax mix in our country."

Commonwealth tax revenue for the 10 years up to the global financial crisis was an average 23.4 per cent of gross domestic product (GDP), but it has averaged 21.1 per cent in the five federal budgets since the global financial crisis.

This is a shortfall of about $32 billion a year in current terms.

Among the measures proposed to lift tax revenue is lifting the GST rate from 10 per cent and for its base to be broadened.

The tax covers about 60 per cent of consumption but it does not apply to areas such as health, education and fresh food.

Mr Oakeshott said he was not on "some GST quest" alone.

"This is got to be a conversation with a pay-off," he said.

He said it was about cutting the number of inefficient taxes such as stamp duty and insurance taxes.

Assistant Treasurer David Bradbury repeated the government's opposition to changing the GST.

"We do not support an increase in the rate and we do not support a broadening in the base," Mr Bradbury told Sky News.

Opposition assistant treasury spokesman Mathias Cormann said a coalition government would not change the GST.

Mr Oakeshott said both major political parties were "gun-shy" about tax reform.

"They both have history and they both have form on the mining resource rent tax," he said.

Both the mining tax and the GST should have been more efficiently delivered, Mr Oakeshott said.

He said more revenue was needed if the government was to pay for social programs such as the Gonski education reforms or a national disability insurance scheme.

"If they try to do that in a revenue-neutral way, we end up where we ended up with the business tax working group, which is nowhere," Mr Oakeshott said.

The Labor government commissioned in 2008 a `root-and-branch' review of the tax system but the GST was excluded from the investigation.