The federal government has confirmed a proposed plan to allow states and territories to charge income tax to better fund extra resources for schools, hospitals and other services.

This would be the first time since World War II that state and territory leaders could set their own rate of income tax. At the moment, the federal government is the sole recipient of income tax.

Prime Minister Malcolm Turnbull told reporters in Sydney on Wednesday, the government will reduce its income tax by an agreed percentage and allow state governments to levy an income tax equal to that amount.

“There would be no increase in income tax from a taxpayers’ point of view – he or she would pay the same amount of income tax.

“But the states would be raising the money themselves.”

Treasurer Scott Morrison added that the government would explore all options that did not increase the overall tax burden.

The proposal will be put forward to premiers, chief ministers and the senior officials ahead of Friday’s Council of Australian Government’s meeting in Canberra.

Meanwhile, Shadow Treasurer Chris Bowen said the move indicates the government is desperate.

“[The plan] is a bad idea, a bad plan to take Australia backwards, take Australia’s schools backwards and we will fight it all the way.”

He said it was a throwback to Tony Abbott’s 2014 Commission of Audit, adding ‘this is a Turnbull-Morrison fix that basically puts the responsibility of the $57 billion hospitals funding cut onto the states’.

– with AAP