May 21, 2008 / 6:08 PM / in 9 years

Canadian PM Harper attacks carbon tax proposal

<p>Prime Minister Stephen Harper speaks during Question Period in the House of Commons on Parliament Hill in Ottawa May 14, 2008. REUTERS/Chris Wattie</p>

OTTAWA (Reuters) - Canadian Prime Minister Stephen Harper slammed on Wednesday his political opponent’s proposal for a carbon tax to reduce greenhouse gas emissions, calling it a “foolish” move at a time of soaring energy prices.

Harper, a Conservative, told reporters that he sees gasoline and other energy prices continuing to rise over the next few years due to demand from emerging economies such as China and India and because the world is using low-cost hydrocarbons “more quickly than most people are aware.”

“What governments shouldn’t do is jump in and actually increase the taxes on these products, which as you know is what my opposition is proposing to do,” he said, referring to Liberal leader Stephane Dion.

Dion, who won the leadership of the Liberal Party 17 months ago on a green platform, is considering imposing a carbon tax on energy costs and then returning some of the money through income tax cuts.

Last week, Dion rejected the idea of a new tax on gasoline but said he was considering either a carbon tax or a cap-and-trade system, whereby big polluters are given greenhouse gas emission limits and have to buy the right to emit more.

“We think that is a foolish and unnecessary policy that’s being proposed by our opposition,” Harper said, speaking at a farm in Beamsville, Ontario, after announcing new food labeling regulations.

Harper ruled out spending increases to counter the fallout from the U.S. economic downturn.

“We don’t want to panic. Now is not the time to start spending like drunken sailors, to start running massive deficits, to start raising carbon taxes all over the economy because somebody thinks they should do something.”

“We’re not going to do wild experiments with the Canadian economy,” he added.

Despite a list of woes including lofty gasoline prices, heavy job losses in the manufacturing sector and higher-than-expected inflation, Harper tried to sound an upbeat note.

“These problems should not blind us to the fact that generally speaking the Canadian economy is in pretty good shape and it’s particularly in good shape compared to the major western economies that we measure ourselves against,” he said.

The strong Canadian dollar versus the U.S. dollar had softened gasoline price hikes for consumers, he said.

“I can tell you if you’re in the United States or Western Europe the price rises have been a lot quicker than they have in Canada because we have been sheltered by the strength of the Canadian dollar,” he said.

Reporting by Randall Palmer and Louise Egan; editing by Renato Andrade

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