Ottawa says won't reverse tax cuts or seek election

Mon Jan 31, 2011 3:37pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Ka Yan Ng and Randall Palmer

VAUGHAN, Ontario/OTTAWA (Reuters) - The Conservative government deflected opposition calls on Monday to reverse corporate tax cuts while vowing not to provoke a snap election over the next budget, due in March.

Opposition to the tax cuts has become the rallying cry of the main opposition party, the Liberals, but Finance Minister Jim Flaherty and a spokesman for Prime Minister Stephen Harper said they would not back down on that issue.

The election threat and sluggish job growth are expected to weigh on lawmakers as they descend on Ottawa for the resumption of Parliament on Monday after a six-week break.

"It's dangerous to create uncertainty in a fragile business economic environment. ... We're going to stay on our old tax plan," Flaherty told reporters.

Parliament passed Conservative legislation in 2007 to lower the corporate tax rate to 15 percent in 2012 from 18 percent. The rate now stands at 16.5 percent.

Liberal leader Michael Ignatieff now says that with the big fiscal deficit and uncertain economic outlook following the recession, that money would be better spent on social programs. The party has conditioned its support for the budget on a concession by the Conservatives on business taxes.

The New Democratic Party is also against lowering corporate taxes and has made some other requests for the budget, while the separatist Bloc Quebecois wants a series of benefits for the French-speaking province.

Harper's Conservatives were reelected in October 2008 with a minority government, meaning they need the support of one of the three opposition parties or a new election will be called.   Continued...

<p>Bank of Canada Governor Mark Carney takes part in a news conference upon the release of the Monetary Policy Report in Ottawa January 19, 2011 REUTERS/Chris Wattie</p>