The Australian business community has welcomed the news of Tony Abbott's $5 billion company tax cut under the Coalition government. However, like everybody else, companies wonder where will Tony Abbott get the money?

With the Opposition leader Tony Abbott and Shadow Treasurer Joe Hockey announcing the 1.5 per cent company tax cut if the Coalition will win the election, business leaders are concerned how the Abbott government will get the funds. They also noted that many businesses will miss out on the Coalition's proposed tax cut since it will only apply to corporations.

Mr Abbott's announcement has two main advantages. One is the tax cut will save big businesses from the Coalition's proposed hike to fund its paid parental leave scheme. The $5-billion tax cut would also attract the business community to the Coalition's side and move away from the Australian Labor Party vote. In 2012, former treasurer Wayne Swan scrapped the proposed Labor tax cut.

According to Mr Abbott's statement in a press conference, the tax cut will bring increased economic activity and ultimately result in jobs and prosperity which are always good for revenue. If Mr Abbott wins the elections and becomes the new Prime Minister of Australia, the planned tax cut will begin in July 2015.

Council of Small Business of Australia Executive Director Peter Strong said Mr Abbott and the Coalition would need to justify the source of funds for the proposed tax cut.

Mr Strong said the business community is waiting for information on how the tax cut will affect the bottom line.

Australian Chamber of Commerce and Industry's Peter Anderson also said the tax cut will not benefit small and medium enterprises since the cut will only apply to incorporated businesses. Mr Anderson said the Coalition announcement was a welcome step in the right direction, but the business community needs to see it incorporated in a broader plan for the economy.

The Coalition's tax cut will certainly reduce the pressure of the cost of doing business in Australia, but SMEs will not get to enjoy this benefit. Mr. Anderson said the tax cut provides a great benefit but needs to be presented in a broader plan to boost the economy of Australia.

For the past few years, the issue of a tax cut has been bothering small businesses. In 2010, the Henry tax review advised a tax cut of 5 basis points. The Australian Labor government, led by former Prime Minister Julia Gillard, had intended to cut tax by 1 per cent. The plan was dropped in 2012 due to national budget constraints.

While the Coalition has demanded that Labor put a stop to its "reckless spending", Mr Abbott and the Coalition has yet to provide details as to how they will fund the $5 billion tax cut.

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