Australia's consumption tax is the second lowest revenue raiser out of all advanced economies, forcing the federal and state governments to resort to "more damaging taxes" on personal income, business and property transactions, warns a new report commissioned by the NSW government.

NSW Federal Financial Relations Review panel member and deputy prime minister when the GST was introduced 20 years ago, John Anderson, said on Wednesday it was a test of "national maturity" for "our children's sake" as to whether the country could again pursue tax reform including increasing the rate or broadening the base of the goods and services tax.