June 18, 2008 / 6:54 PM / in 9 years

Canadian opposition plans sweeping carbon tax

OTTAWA (Reuters) - Canada’s Liberal Party will unveil a long-awaited carbon tax plan on Thursday, detailing an idea the Conservative government has dismissed but one the Liberals hope will help them return to power.

The opposition party said on Wednesday it would unveil what it is calling a “green shift,” avoiding the word “tax” on the advice of veteran Liberal Senator David Smith.

A Liberal source had previously said the idea was to apply C$15 billion ($14.7 billion) in taxes on fossil fuels and return the same amount via income tax cuts.

The Conservatives got out ahead of the announcement with an advertising campaign that said Liberal leader Stephane Dion planned a “tax on everything.” The Liberals hope the income tax cuts will sweeten the carbon tax plan with the public.

“We’ve only seen half the story, the negative half. The Conservatives have talked about the carbon tax. We have yet to talk about all the benefits arising from this,” Liberal Member of Parliament John McCallum told reporters on Tuesday.

Conservative Prime Minister Stephen Harper accused Dion of trying to break a promise made when he was running for the Liberal leadership in 2006.

“The leader of the opposition told his own party during the leadership race that he would never impose a carbon tax, that it was bad policy,” Harper told Parliament.

“What we will not do, and what will clearly hurt Canadian families, is to go around imposing carbon taxes at this time on all kinds of fuels.”

The Liberals see the environment as a weakness of the minority Conservative government, whose home base is in the energy-rich province of Alberta.

Dion won the leadership of the Liberal Party 18 months ago on a green platform and appears ready to defy conventional political wisdom that in tough economic times voters are less inclined to make sacrifices for the environment.

Many Liberals are seeking a campaign plank to distinguish them from other parties and to restore an environmental record tarnished by the fact that greenhouse gas emissions, blamed for global warming, soared when they were in power.

But some privately fear that new fuel and electricity taxes are politically unpalatable when prices are already rising.

Three Liberal members of Parliament even backed a decision by the House of Commons agriculture committee to study the effects of a carbon tax “to ensure that Canadian farmers are not saddled with a carbon tax which would further increase their input costs and hurt their competitiveness.”

No election is expected this summer but the Liberals could try to bring the minority government down in the autumn or some time next year. The Conservatives were elected in January 2006 and must face an election by October 2009. The Liberals trail the Conservatives slightly in opinion polls.

($1=$1.02 Canadian)

Editing by Janet Guttsman

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