September 23, 2008 / 4:41 AM / 9 years ago

Liberals promise balanced budget, tax cuts

OTTAWA (Reuters) - Canada’s opposition Liberals, trying to stave off defeat in the Oct 14 election, promised on Monday to cut taxes and boost social spending if they won power, and vowed the federal budget would stay in surplus.

Polls show the ruling Conservatives are on track to retain power, and perhaps even translate their minority government into a majority in the House of Commons.

The centerpiece of the Liberals’ four-year plan is a carbon tax designed to cut emissions of greenhouse gases, coupled with income tax cuts that the party pegs at up to 10 percent for many Canadians.

The Liberals also promise to cut both the corporate tax rate and the small business tax rate.

Conservative Prime Minister Stephen Harper says the carbon tax could drive the country into recession, especially as the U.S. slowdown is already hurting the domestic economy.

But Liberal leader Stephane Dion said the government would continue to balance the books and would bring back a C$3 billion ($2.9 billion) contingency reserve that could be used to pay down debt if it is not used.

“We don’t need any lessons from Stephen Harper on how to manage the economy,” he told a news conference to unveil the party’s campaign platform, noting that it was a previous Liberal government that had eliminated a C$42 billion deficit inherited from the Conservatives in 1993.

Dion, a former federal environment minister, plans to impose an immediate levy of C$10 a tonne of greenhouse gas emissions, increasing this by C$10 a year until the price hits C$40 a tonne. This would not apply to the price of gasoline.

The Liberals promise to reduce greenhouse gas emissions to at least 20 percent below 1990 levels by 2020, in part by imposing mandatory emissions caps for large polluters and by setting up a carbon trading system.

The Conservatives also say they will cut greenhouse gases, but have a much more modest target of reducing output of 2006 levels by 20 percent by 2020.

The Liberal campaign platform also includes a 10-year C$70 billion plan to invest in infrastructure, as well as increased spending in education, child care and programs to cut poverty.

It says it would restrict the increase in spending to an annual average of 3.4 percent.

The Liberals promised to replace a planned 31.5 percent tax on income trusts with a smaller 10 percent rate. Ottawa announced in October 2006 it would start imposing the tax on the popular investment vehicles as of 2011.

Harper said his government would crack down on crime by imposing adult sentences on youths aged 14 and over who had been convicted of serious, violent offenses. Opposition parties said the measure was evidence the prime minister wanted to impose an extremist right-wing agenda on Canada.

“This is the Republican way in the United States -- more people in prison, more arms in circulation. I don’t want to live in that (kind of) society,” said Gilles Duceppe, leader of the Bloc Quebecois.

Polls on Monday predicted differing outcomes for next month’s vote. A survey by Nanos Research -- the most accurate firm in the 2006 election -- put the Conservatives at 35 percent support and the Liberals at 30 percent, suggesting a close-run race.

An Ekos poll put the Conservatives at 37 percent and the Liberals at 24, suggesting a Conservative majority.

($1=$1.03 Canadian)

With additional reporting by Louise Egan; editing by Rob Wilson

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