Prime Minister Malcolm Turnbull is reportedly preparing to ditch his signature big business tax cuts, in an attempt to soothe the tensions of angry backbenchers and blunt a potent opposition attack.
The federal government is facing near-certain defeat when the Senate this week votes on cutting company tax rates from 30 to 25 per cent.
Mr Turnbull will host cabinet ministers for dinner at The Lodge on Sunday night, where he will propose abandoning the contentious tax cuts should the vote fail, News Corp reports.
But holding a press conference ahead of Sunday night's dinner, the prime minister insisted the tax cuts weren't dead and buried just yet.
"Negotiations continue," Mr Turnbull told reporters at a rural property in western NSW.
"We are determined to ensure that our company tax system, our business tax system, is competitive."
Cabinet minister Bridget McKenzie is urging the government to stick with its tax cut plans.
The federal opposition was quick to pounce on speculation the company tax cuts could be dropped, pointing out the various times Mr Turnbull and his senior ministers committed to taking the policy to the next election.
Senator McKenzie, the deputy leader of the National Party, says tax relief is crucial for export industries like agriculture and mining.
"We need an internationally competitive tax rate for our globally exposed industries," she told Sky News.
"I think it's a sound plan and that's why we'll be taking it to the Senate this week."
The legislation has been listed for debate in the upper house on Monday.
But the cuts are unlikely to pass as Labor and the Greens oppose them, and the government has been unable to convince enough crossbench senators.
On current numbers, the legislation appears doomed with just four crossbenchers backing the cuts, leaving the government four votes short.
"I'm not as pessimistic," Senator McKenzie said.
"I'm hopeful as always that the Senate will pass the government's legislation."
Ben Oquist from the Australia Institute has released new analysis suggesting the company tax cuts would represent a $39.5 billion "gift" to the big four banks over the first 10 years.
Polling commissioned by the left-leaning think tank also suggests 61 per cent of voters, including more than two-thirds of One Nation supporters, believe the Senate should block the cuts.
"It's clear that the community are looking for good service delivery and the revenue to fund it, not a tax cut giveaway to big business and especially not $39.5 billion to the big banks," Mr Oquist said.
Australian Associated Press