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Harper's Tax Plans Come Under Fire From Liberals

by Mike Godfrey, Tax-News.com, Washington

10 April 2006

The minority Conservative government of Stephen Harper is facing its first challenge to its tax plans, after the Liberal Party last week urged it to drop its planned cut in goods and service tax in favour of making permanent a cut in income tax for the low paid, introduced by the Liberal government prior to losing the election.

Responding to last Tuesday's throne speech, in which the new government set out the legislative agenda for its mandate, interim Liberal leader Bill Graham slammed plans for a 2% cut in GST to 5% as "a short-term hit with no long-term gain for the economy."

Prime Minister Stephen Harper claims that an average family of four with an income of C$60,000 a year, would pay about C$400 less in taxes. However, the Liberals claim that an individual would have to spend at least C$32,000 a year on goods and services just to break even with the savings gained by taxpayers from their own proposals.

The Liberals claim that their tax plan provides C$320 in annual tax relief to the average Canadian.

"The Conservatives shouldn’t raise the personal income taxes of lower income Canadians to fund their GST cut," John McCallum, Liberal Finance spokesman commented in a statement issued by the Liberals last week.

McCallum argued that the income tax hike was "completely unacceptable" at a time when the economy is strong and the government is running a budget surplus.

McCallum and Liberal Senator Jack Austin have launched a campaign entitled “Don’t Raise My Income Taxes", through which they are urging Canadians to lobby their local MPs to oppose the government's tax policy.

“Canadians don’t want a tax hike when the federal coffers are already full,” stated Austin. “Since this doesn’t seem to be registering on the Conservative’s radar screen, we are encouraging Canadians to put it there," he added.

Austin is also tabling a private member’s bill that aims to make last year’s tax relief permanent.

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