November 28, 2008 / 6:12 PM / 9 years ago

Flaherty defends plan to end party subsidies

TORONTO (Reuters) - Canadian Finance Minister Jim Flaherty on Friday defended a government proposal to eliminate subsidies to political parties, saying it was wrong to confiscate tax dollars to redistribute to politicians while the country was tightening its belt.

<p>Canadian Finance Minister Jim Flaherty arrives to speak to the economic community in Toronto November 28, 2008. Canada's minority government teetered on the edge of collapse on Friday, just six weeks after its reelection, as opposition parties talked of forming a coalition to replace the ruling Conservatives. Both the Conservatives and the opposition parties were engaged in high-stakes brinkmanship over the fiscal update that Flaherty presented on Thursday. REUTERS/Mark Blinch</p>

In the fall fiscal update presented by Flaherty on Thursday, the Conservative government said it wanted to eliminate the payment of C$1.95 that Ottawa makes each year for every vote a party receives in the last general election. The subsidies cost about $27 million annually.

“That is the subsidy that we propose to eliminate. Our view is that political parties can raise their own money from their own donors, who give them money voluntarily and that we ought not to be confiscating tax dollars and distributing it to political parties,” Flaherty said at a luncheon speech.

Opposition parties are threatening to vote against the proposal and bring down the minority Conservative government.

The elimination of the subsidies would hurt opposition parties much more than the Conservatives, who are generally more successful in grass-roots fund-raising.

“Restraint doesn’t mean looking at cutting services for Canadians first. It starts with us as politicians and this has caused a bit of a stir I know,” said Flaherty. “Canadian tax dollars have been supporting political parties for a long time.”

Flaherty also repeated that Canada could go into deficit if the government announces fiscal stimulus measures, but that any deficit would be short-lived.

“If we have to take additional stimulus steps and measures in the Canadian economy, we will do so, even if it means that we would go into deficit,” he told a business audience in Toronto. “We would go into deficit only temporarily.”

The government said on Thursday that the economy has slipped into recession, but projected a surplus over the next fiscal year. Although the plan provided no additional stimulus for an economy struggling in a global downturn, but Flaherty insisted on Friday that the government would take more steps if necessary.

Flaherty said Canada will not reduce transfers to provinces even though the country is close of slipping into a recession. He said a review of government-owned assets should help it identify billions of dollars in savings.

Reporting by Ka Yan Ng; Editing by Frank McGurty

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