January 12, 2011 / 6:08 PM / in 7 years

Liberal party mutes anti-budget talk

OTTAWA (Reuters) - Canada’s biggest opposition party on Wednesday edged away from a threat to vote against the government’s next budget, muddying the outlook for a spring election.

<p>Canada's Liberal Leader Michael Ignatieff speaks during the Liberal caucus Christmas Party in Ottawa December 15, 2010. REUTERS/Blair Gable</p>

The Liberals, who indicated late last year they were certain to vote against the budget, said they would decide only after they saw the document, due in the first quarter.

“We will reserve our ultimate decision on the budget until we see it,” Liberal leader Michael Ignatieff told reporters, describing C$6 billion ($6.1 billion) in annual corporate tax cuts brought in this year as “crazy.”

Canada’s minority Conservative government needs the backing of at least one of the three opposition parties to pass the budget. If all three vote against spending plan, the government falls and there will be a new election.

Ignatieff said last year that the measures likely to be included in the budget -- as well as the corporate tax cuts -- meant the Liberals were certain to vote against it.

“Is it a prudent and good choice for Canada to take corporate tax down when you’re in a C$56 billion deficit? We’re saying these are bad choices,” he said.

The tax cuts date from a previous budget. They came into effect on January 1.

Conservative Prime Minister Stephen Harper took power five years ago with a minority government and he won a strengthened minority in an October 2008 election. Polls indicate that an election now would produce yet another Conservative minority.

Ottawa insists the next budget will mark the end of a two-year C$48 billion stimulus program designed to shield the economy from the worst of the global financial crisis.

Finance Minister Jim Flaherty says he will have to make tough choices to help cut a budget deficit, and on Wednesday he derided what he called the Liberals’ tax-and-spend policies.

“I don’t think Canadians are interested in big new spending programs because they’re quite concerned about the fragility of the economic recovery and job creation,” he told reporters in Washington.

Harper could also survive with the backing of the separatist Bloc Quebecois, which is seeking a C$2.6 billion tax deal for the predominantly French-speaking province of Quebec.

The left-leaning New Democrats suggested last month they might support the budget in return for more aid for the elderly, a cut in taxes on home heating fuel and targeted investments in domestic manufacturing.

Ignatieff said if Canadians voted for the Bloc or the New Democrats, the result would be a Conservative government.

“I am not the guarantor of this government’s future ... I anticipate there will be an election. I think it’s a strong possibility. I am not excluding the possibility that there will be an election,” Ignatieff said.

Additional reporting by David Lawder in Washington; editing by Janet Guttsman

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