Some of the nation's most senior executives have questioned whether Australia can afford to lower the company tax rate, while at the same time throwing tentative support behind Opposition Leader Tony Abbott's pledge to cut taxes for big business.
But the powerful peak business lobby wants the company tax rate to be cut further, bringing Australia in line with the average of many developed economies.
Mr Abbott outlined plans on Wednesday to lower the company tax rate to 28.5 per cent, from 30 per cent. He promised the scheme, which would cost $5 billion, would be introduced within two years if the Coalition wins the election.
In 2010, the Henry Tax Review recommended cutting the tax rate to 25 per cent "over the short to medium term, as fiscal and economic circumstances permit".
But it also recommended a broad-based resource rent tax at the same time, given corporate taxes act like a tax on profits derived from Australia's non-renewable resources.
BHP Billiton CEO Andrew Mackenzie declined to be drawn on the level of the proposed cuts, but said tax should be considered as part of a broader issue of competitiveness.
"Tax is one of many issues we need to talk about to encourage Australia's competitiveness and productivity and we need to work that through ... with whoever wins the next election," he said.
But Roger Corbett, Fairfax chairman questioned whether the federal budget was in a position to pay for the cuts.
"We want to introduce a disability scheme, we want to introduce a maternity scheme ... so when we hear of company tax being reduced, Australia needs more revenue, not less," he said.
The Business Council of Australia - which is comprised of the CEOs of 100 of the largest corporations operating in Australia - says the plan would send "important signals that will boost business confidence" and help to boost jobs and investment.
But it also reminded the government that it would like the tax cut further. "The BCA has called for lowering the company tax rate down to 25 per cent as a priority, but only when fiscal circumstances permit to make Australia's system more internationally competitive," BCA president Tony Shepherd said.
Mr Shepherd also remained concerned about the Coalition's paid parental leave scheme, the $4.3 billion cost of which will be borne by the country's biggest companies.
"While most businesses will benefit from the tax cut when it takes effect on July 1, 2015, the fact that Australia's larger businesses will be required to pay a 1.5 per cent levy to fund the Coalition's paid parental leave scheme remains a concern."
Heather Ridout, a board member of the Reserve Bank and also a member of the Henry Tax Review panel, said lower corporate taxes help attract investment.
"This is the Henry argument, we needed to make it much more attractive for overseas investment to come into the industries that were being punished by a dollar at parity.
"The gains from corporate tax reduction are much more for bigger companies, and particularly for foreign-owned ones."
Global corporate tax rates
New Zealand 28