March 28, 2011 / 11:31 PM / in 6 years

Canada government, opposition duel over taxes

<p>Canada's Prime Minister Stephen Harper speaks to journalists as his wife Laureen looks on outside Rideau Hall in Ottawa March 26, 2011. A general election will be held in Canada on May 2, Harper said on Saturday. REUTERS/Chris Wattie</p>

TORONTO (Reuters) - Canada’s government and the main opposition party dueled over taxes on Monday, trying to gain an early advantage in an ugly election campaign that looks set to return the right-of-center Conservatives to power.

Prime Minister Stephen Harper, whose government was toppled last week, unveiled a tax cut which will take effect in about five years’ time and continued to insist the three opposition parties were waiting for the chance to seize power.

Michael Ignatieff, leader of the opposition Liberals, denies plans to forge a coalition with the New Democrats and the separatist Bloc Quebecois, and also dismissed charges he planned to boost taxes to pay for expensive social programs.

The opposition toppled the Conservative government on the grounds that it was tainted by sleaze, had managed the economy poorly and was in contempt of Parliament. Voters will go the polls on May 2.

Harper, whose party has been in power since 2006 with two successive minority governments, said once the current budget deficit was eliminated, the government would unveil tax cuts for families worth about C$2.5 billion a year.

“Canadians can choose an Ignatieff-led coalition’s high tax agenda that will ignore the real world needs and priorities of Canadian families or they can choose the Conservative low tax plan for families,” he told reporters in British Columbia.

The government estimates the shortfall in the 2010-11 fiscal year will hit C$40.5 billion and says it should be back in the black by 2015-16.

Ignatieff, who says he will roll back a recent corporate tax cut, said his party’s spending plans would cost less than those proposed by Conservatives. He slammed the government’s “wasteful spending” and said his party would cut Ottawa’s outlay without raising business or personal taxes.

“This program of the Liberal Party of Canada will cost less -- it will cost less than the Conservative program. And we will not raise taxes on ordinary Canadian families,” he told reporters in Toronto, the party’s main stronghold.

Along with promising to scrap C$6 billion ($6.1 billion) in corporate tax cuts, the Liberal leader said he would tear up a C$9 billion deal to buy U.S. fighter jets.

The Conservatives have gained support with the election’s start and have the backing of 38 percent of voters compared to 24 percent for the Liberals and 20 percent for New Democrats, according to Harris/Decima survey for Canadian Press.

A Harris/Decima survey released a week earlier put the Conservatives at 34 percent, Liberals at 28 percent and New Democrats at 17 percent.

Harper has been helped by vote-splitting between the Liberals and the New Democrats, who are both fighting over the same centrist and center-left segment of the electorate.

For the second day in a row, Ignatieff held an event in a parliamentary constituency held by the New Democrats.

Reporting by Euan Rocha, writing by David Ljunggren; editing by Rob Wilson

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