September 3, 2008 / 8:59 PM / 9 years ago

Canada opposition Liberals adjust carbon tax plan

WINNIPEG, Manitoba (Reuters) - Canada's opposition Liberal Party responded to criticism of its carbon tax plan on Wednesday, ahead of a looming election call, promising a total of C$900 million ($849 million) in tax breaks and subsidies to farmers, loggers, fishermen and truckers.

The "green shift" carbon tax plan, the central election plank for the Liberals, will include tax breaks worth C$400 million for farmers and loggers who buy environmentally friendly machinery, said party leader Stephane Dion.

Dion also said a Liberal government would earmark an additional C$500 million for environmental farm research and rebates to farmers, fishermen and loggers who invest in green technology and equipment.

"Canadians want to do the right thing for their wallet and for the planet," Dion said in a campaign-style address to Liberal caucus members, who were meeting in Winnipeg.

Dion has said the tax on diesel, natural gas, coal and jet fuel, designed to cut the use of fossil fuels and the resulting emissions of greenhouse gases, would eventually raise C$15 billion ($14 billion) a year.

Prime Minister Steven Harper, whose minority Conservative government has been in power since January 2006, is expected to call an election within days for October14. Currently the two main parties are neck and neck in opinion polls and the carbon tax is expected to be one of the main issues.

The Conservative Party has already been attacking the carbon tax in pre-election television and radio ads running across the country.

The new tax would be revenue neutral, the Liberals say, offset by cuts to personal and corporate income taxes and increased spending on social programs.

The plan eventually would give a family of four earning C$40,000 a year tax cuts of C$1,900, Dion said.

Harper has said the carbon tax would hurt Canadians at a time of sky-high energy prices and when the economy is slowing down, and he chided Dion on Wednesday for making changes in the plan.

"I think people's alarm bells should be up," Harper told a news conference in Windsor, Ontario.

But Dion told reporters the changes come after two months of meetings with Canadians.

"We said it was a dialogue," Dion said. "We consult, we listen and we improve."

About 45 percent of Canadians approve of the plan, according to an Ipsos Reid poll published in the National Post newspaper on Wednesday, down from 52 percent two months ago.

Opposition to the plan grew to 51 percent from 42 percent, the poll said.

The province of British Columbia enacted North America's first comprehensive carbon tax this year, and Quebec has a more limited version.

($1=$1.06 Canadian)

Reporting by Roberta Rampton, Allan Dowd; editing by Rob Wilson

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