Tax cut good for prosperity, Abbott says Business has widely applauded the coalition's plan to cut the company tax rate but believes it must be part of a wider tax reform agenda. Federal Treasurer Chris Bowen questioned how the $5 billion reduction in company tax will be paid for and described the coalition's approach to costings as magic pudding economics sprinkled with fairy dust. In his first major announcement of the election campaign, Opposition Leader Tony Abbott promised his government would lower the 30 per cent company tax rate to 28.5 per cent from July 1, 2015. "Reduced company tax will result in more economic activity, and more economic activity will be good for jobs, it will be good for prosperity, and ultimately it will be good for government revenue," Mr Abbott said in Adelaide on Wednesday. The cut would follow the scrapping of the carbon and mining taxes next year if the coalition wins the September 7 election. Mr Abbott said the reduction in tax revenue would be covered by $17 billion in previously identified savings. Mr Bowen said this was "just nonsense." "Mr Abbott is simply not up to the job of providing a credible alternative prime minister of Australia when he engages in his magic pudding economics ... adding some fairy dust and saying something will turn up on the night," he said in Sydney. Shadow treasurer Joe Hockey said he had changed his mind on a company tax cut - having previously refused to promise one - because of the "massive deterioration" in unemployment under Labor. "Someone has got to step in and do something about it," he said. The government is forecasting the jobless rate rising to 6.25 per cent in this financial year and the next, the highest level in over 10 years. Economists expect the unemployment rate to rise to 5.8 per cent when July labour force data is released on Thursday, up from 5.7 per cent in June. Still, CPA Australia chief executive Alex Malley said relieving pressure on business through a tax cut means an injection of confidence and a boost to competitiveness. "When business is confident, jobs are created," he said in a statement. Business Council of Australia president Tony Shepherd agreed. But Mr Shepherd said the coalition's plan to impose a 1.5 per cent levy on larger companies to pay for its paid parental scheme "remains a concern." Yasser El-Ansary, general manager at the Institute of Chartered Accountants, said the proposed start date was a long way off so business will be cautious because past promises have been abandoned. Neither party has a good track record on delivering an actual cut to the rate. Companies are growing tired of waiting for it to materialise," he said in a statement. Meanwhile, Mr Abbott said there were "no plans whatsoever" by the coalition to change the GST. Speculation about a rise in the 10 per cent GST rate was a Labor scare campaign, he said. The coalition plans to conduct a comprehensive taxation review in its first term and a produce a white paper of proposed reforms for consideration. ACTU President Ged Kearney joined the chorus of critics asking how the $5 billion tax cut would be paid for. "We cannot support a $5 billion company tax cut paid for by either higher income or consumption taxes on workers or savage cuts to services," Ms Kearney said.