Tory Shepherd, Michael Harvey with thanks to the Herald Sun

Mr Abbott announced yesterday that a Coalition government would cut the company tax rate from 30 per cent to 28.5 per cent.

He told ABC Radio in Melbourne this morning that the tax would be funded through $24 billion in savings, and that it would ultimately deliver money to families.

“This tax cut to business will help business to be more prosperous, and that will mean a more prosperous society,” he told Jon Faine.  “We do have a lot of savings that we've identified.”

Asked whether the tax cut would deliver dividends to shareholders rather than families, Mr Abbott said the money would flow through.

“If you reduce the cost to business, over time you will get less upwards pressure on prices… you get many good things and those dividends go to people,” he said, adding that superannuation funds would see the benefits.

Mr Abbott also said his promise to cap immigration numbers at 170,000 would not stop economic growth. Mr Faine also asked him whether he was struggling to get donations from business because of his immigration policies.

“The last thing anyone should do is pitch their policy to attract donations,” he said. Mr Abbott is expected to make an announcement shortly in Melbourne and to travel to Adelaide later today.

The Liberal leader promised a 1.5 percentage point cut to take the company rate to 28.5 per cent - 0.5 points lower than the Government has pledged.

"We are always going to be the low tax party," Mr Abbott said. "We believe in lower, simpler, fairer taxes."

The cut would cost $2.1 billion and would be financed from Budget spending cuts already identified by the Coalition. The cut stands in contrast to Mr Abbott's plan to impose a 1.7 per cent levy on big business to finance his $2.7 billion paid parental leave scheme. This has sparked Labor claims of a Coalition "con".

"So as I understand Mr Abbott's position now: He's going to put company tax up and he's going to put it down," Prime Minister Julia Gillard said. "This is further proof that Peter Costello was right about Tony Abbott. He's clearly bored by economics and he's not understanding any of the details."

Mr Abbott forged ahead with announcing his small business policy despite the day being overshadowed by damaging leaks against Ms Gillard.

While he might have been expected to maintain a relatively low profile to keep the spotlight on the PM's woes, Mr Abbott opted to release one of his biggest-ticket items.

It took the Government by surprise after Mr Abbott's recent dismissal of Labor's original promise of a 2 per cent cut in the corporate rate (later changed to a 1 per cent cut after the mining tax deal).

"No one is much going to notice a 2 per cent cut in company tax, but everyone will notice a massive hit on the mining sector," he said in May.

Labor has promised to use revenue from its mining tax to finance its cut in the tax rate but Mr Abbott said his plan was superior. "I want to make it very clear that, as far as the Coalition is concerned, companies deserve a tax cut," Mr Abbott said.

"And we will give them a tax cut without a mining tax to pay for it. "We'll give them a tax cut without a carbon tax to pay for it. We will ensure that this tax cut is affordable in the longer term because we will run a more frugal government."

The announcement sparked immediate questions on the future of the Coalition's parental leave plan, which would be finaced by a 1.7 per cent levy on businesses with taxable incomes of more than $5 million.

Those companies would still be paying effective company tax of 30.2 per cent during the life of the levy. Shadow treasurer Joe Hockey hinted at a rethink, saying there would be "more to say" about the parental plan in coming days.