Pooping puffin paralyzes Canada Conservative event

WINNIPEG (Reuters) - Canadian Prime Minister Stephen Harper wanted to talk about his promised diesel tax cut on Tuesday but found himself sidetracked by his Conservative Party's depiction of a puffin pooping on his chief rival.

A Conservative website, notaleader.ca, showed an animated puffin flying across the screen and plopping a white blob on the shoulder of Liberal leader Stephane Dion, drawing an angry response from Dion and an apology from Harper.

"It was tasteless and inappropriate. We have enough differences with the Liberals without getting into that kind of thing," Harper told a news conference after announcing he would cut the diesel tax in contrast to Dion's proposal to raise it.

"I offer my sincere apologies to Mr. Dion."

The Conservatives quickly changed the graphic so that the puffin just flies by Dion without dropping anything.

It was his party's first gaffe of the campaign, which Harper launched on Sunday for a general election to be held on October 14 , as attention was at least partly diverted from his first policy announcement and from attempts to portray him as a family man.

In Montreal before Harper's news conference, Dion declared: "This is saying more about them than about us."

On matters of substance, Harper said his proposed diesel tax underlined the different visions he and Dion have.

Dion is proposing to raise the excise tax on diesel as part of a broader set of carbon taxes to fight climate change, offset with income tax cuts and subsidies -- taxing what is bad, pollution, and cutting taxes on what is good, income.

Harper, speaking at a distribution center where Manitoba vegetables are trucked across the province and to the United States, challenged the idea that activities that cause carbon emissions are automatically bad.

"The kinds of things diesel is used for, which is primarily for commercial transportation, this has to be done. My opponent has said he wants to tax things that are bad," Harper said.

"Heating your home, is that bad? Taking groceries to market, is that bad? Allowing airplane transportation, the shipping of goods across the continent, around the world, business and passenger transportation, are these bad things? No, these are essential things for the economy."

Dion would raise the tax on diesel to 11 Canadian cents a liter (39 U.S. cents per U.S. gallon) from the current 4 cents (14 U.S. cents/gallon) over four years. Harper would halve the tax, at a cost of C$600 million.

The prime minister said that because the demand for diesel is inelastic -- not responsive to small tax changes -- it would have only a negligible effect on carbon emissions.

He said his plan to force emission cuts through industry regulation would have far greater effects.

In Montreal, Dion announced a proposal to restore a program Harper had axed, which paid Canadian citizens and interest groups to launch constitutional challenges of government laws.

Until about two weeks ago the Conservatives and Liberals were running neck and neck in the polls but the Conservatives have now opened up a substantial lead in public support.

($1=$1.07 Canadian)

(Additional reporting by Randall Palmer and Louise Egan)