Liberals pressure government on corporate tax

OTTAWA (Reuters) - Opposition parties should unite to fight corporate tax cuts planned by the Conservative government, the Liberal Party said on Thursday amid expectations it may seek to trigger an election next year.

The Liberals, the largest opposition party in Parliament, vow to vote against the next budget, expected in early 2011, unless the government reverses the tax cuts. But it can only defeat the plan if joined by the other two opposition parties.

“It’s a major expenditure and it significantly impacts the fiscal capacity of the country, so we would view it as essential that the government reverse its position on that issue,” said Liberal legislator Scott Brison.

The Liberals support the tax cuts but only at a later date after Ottawa has eliminated its budget deficit, he said.

The left-leaning New Democratic Party has already said it wants the tax cuts canceled. But the NDP and the government do have some “common ground” on other budget-related items, Finance Minister Jim Flaherty told Reuters earlier this month.

Flaherty’s “pre-budget overtures” to the NDP worry the Liberals and prompted their call on Thursday for the Liberals and NDP to join forces.

“If the Conservatives don’t change course on corporate tax cuts, we hope that the NDP do not flip flop and support the budget,” Brison said.

The ruling Conservatives have a minority of seats in the House of Commons. They need the support of at least some opposition legislators to pass confidence votes like the budget and remain in power.

If the budget is defeated in Parliament, a general election will automatically be called.

Prime Minister Stephen Harper’s government has legislated a series of reductions in corporate income tax rate to 15 percent in 2012. The next scheduled cut is on January 1 to 16.5 percent from the current 18 percent.

Flaherty promoted the tax cuts to investors in New York this month and says any delays would hurt business confidence.

In recent media interviews, Liberal leader Michael Ignatieff has sounded hawkish on the election issue even though polls show a vote now would result in another minority Conservative government.

The Liberals say the government has ignored its advice to postpone unaffordable tax cuts. The opposition party would prefer the next budget use the tax revenues to finance programs like family care, university education and pension reform.

The third opposition party, the separatist Bloc Quebecois, has twice supported Conservative budgets but whether it would do so again appeared doubtful after leader Gilles Duceppe said the government was bad for his French-speaking province.

Editing by Jeffrey Hodgson