Canada Tories to follow tax-cut, pro-business agenda

Tue May 3, 2011 12:24pm EDT
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By Janet Guttsman and David Ljunggren

OTTAWA (Reuters) - Re-election with a strong majority allows Canada's Conservatives to press ahead with an agenda that includes corporate tax cuts and a balanced budget, winning early plaudits from the business community.

The Conservatives, who won 167 of the 308 seats in the House of Commons in Monday's federal election, have long planned to cut the corporate tax rate to 15 percent next year from 16.5 percent. Their goal: to help Canadian business compete in a global market.

They say other tax breaks, including a family-friendly plan that will lower tax rates for couples with children, will follow once the government eliminates Canada's record-breaking budget deficit. They promise that will happen within four years.

"Our first job will be to implement what we set out in our budget -- our plans for jobs and growth without raising your taxes," Prime Minister Stephen Harper said at his victory party early on Tuesday.

The election polarizes the Canadian political scene, leaving just two parties with a significant number of seats in Parliament. The left-leaning New Democrats won 102 seats to become the official opposition.

The Conservative agenda is a plus for Canada's business sector, which had fretted at the possibility of the pro-labor New Democrats forming a minority government, supported by the Liberals. The New Democrats had promised to eliminate subsidies for the oil industry and bring in environmental curbs.

"By getting a clear (Conservative) majority in the Parliament, markets are able to handicap investment opportunities better," said Stephen Wood, chief investment strategist for North America at Russell Investments in New York. He said oil and gas shares will probably get a boost, as will tax-sensitive and interest-rate sensitive sectors.

"The outcome of this election gives certainty for a policy continuity and it allows fundamentals to drive investments more.   Continued...

<p>Conservative Party leader and Canadian Prime Minister Stephen Harper greets supporters with his son Ben following his victory speech at his federal election night headquarters in Calgary, Alberta, May 2, 2011. REUTERS/Todd Korol</p>