The Premier, Lara Giddings, said the State Government would carefully consider the second interim report of the GST Distribution Review panel, released today.

The second report focusses on the relationship between the GST and state taxes.

"While we will take the time to review this second report in full, I am concerned by the suggestion that GST payments could be withheld as an incentive for policy reform, including reform of State taxes.

"Such a heavy-handed measure would be unwarranted and counter-productive.

"When required, major reform should be pursued through separate reward payments, as occurred successfully through the National Competition Policy payment program.

"Furthermore, last year's Tax Summit showed that any discussion about state tax reform will be hampered without parallel debate about reform of the GST."

Ms Giddings welcomed the review panel's finding that there is no hard evidence to show that the current GST distribution system acts as a disincentive to state tax reform.

"All states have continually pursued and implemented tax reform since Federation, and there is no evidence that Horizontal Fiscal Equalisation has ever altered a state's decision in relation to tax policy," she said.

"Tasmania was one of only two states that received reward payments as a result of meeting the Commonwealth timetable to abolish inefficient taxes following the introduction of the GST."

Ms Giddings said the State Government would continue to fight hard for Tasmania's fair share of the GST.

"The Tasmanian Government is a strong supporter of the current GST distribution system which ensures that all states have the capacity to provide equal services and infrastructure to their residents.

"It is imperative that this system is preserved, particularly in response to self-interested attacks from wealthy Liberal states and Federal Opposition Leader, Tony Abbott."