Tax deal could help Canada government avoid defeat

Fri Nov 26, 2010 3:05pm EST
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By David Ljunggren

OTTAWA (Reuters) - Canada's minority Conservative government is working on a possible tax deal with the influential province of Quebec that could help Prime Minister Stephen Harper stay in power longer than expected.

Finance Minister Jim Flaherty confirmed on Friday he was in talks with Quebec over federal compensation for tax changes the province introduced almost 20 years ago, something the separatist Bloc Quebecois has long demanded.

The Bloc indicated that if the tax measure were in the minority Conservative government's next budget in early 2011, it might vote in favor and thereby head off an early election.

"If the (budget) is generally bad for Quebec, we'll vote 'No'. If it's generally good for Quebec, we'll vote 'Yes'," senior Bloc legislator Pierre Paquette told reporters, saying it was "a bit early" to predict what the party would do.

The Conservatives need the support of at least one opposition party to stay in power. Many political observers had predicted that all three opposition parties would unite early next year to reject the budget and force a new election.

A "yes" vote from the Bloc would prevent that and keep the government in power.

The Bloc, which seeks independence for the French-speaking province of Quebec, has voted for budgets presented by the Conservatives on two occasions, arguing that the spending plans were in Quebec's best interests.

Paquette urged Ottawa to launch a "blitz of negotiations so we can reach agreement before Christmas" on a tax deal.   Continued...

<p>Canada's Prime Minister Stephen Harper speaks during Question Period in the House of Commons on Parliament Hill in Ottawa November 25, 2010. REUTERS/Chris Wattie</p>