Treasurer Wayne Swan has released draft laws paving the way for tax rates business tax cuts.

The draft laws reduce tax rate from 30% to 29%, effective for the income year 2012-13 for small businesses, and by 2013-14 for other companies.

"This will help up to 720,000 small business companies by allowing them to reinvest more of their profits to grow their businesses and employ more Australians," Swan said.

He said the cuts would help all Australian businesses – including those “not in the mining boom fast lane” and those facing challenges posed by the high Australian dollar.

Businesses with income under $2 million a year are defined as small for the purposes of the proposed cuts.

“Cutting the company tax rate will increase productivity, promote broad-based economic growth and encourage more investment and jobs across Australia's entire economy,” Swan says.

The opposition reacted by saying it would instigate ‘modest’ tax cuts.