Liberal Leader Stephane Dion has confirmed his party will abstain from today's vote on the Conservative mini-budget, ensuring the government will not fall and an election will not be triggered.
Dion also said if he were elected he would consider rescinding GST cuts promised by the Conservatives in Tuesday's mini budget.
The Grit leader said many people believe the two percentage point cut to the goods and services tax was the wrong move. He said it amounts to $34 billion that the govenrment could spend elsewhere.
But he said an election campaign will not be fought anytime soon. Dion said the party is acting out of compassion for Canada in abstaining from today's confidence vote on the Tory government's mini budget.
"Yes, we will be abstaining for the good sake of Canada. It is not a good declaration. It is not sending the country a good direction," Dion told reporters after a caucus meeting Wednesday.
"We are the party of compassion, the party of Kelowna for aboriginals, the party that wants to put the fight against poverty at the core of agenda. We want to invest in Canadians and families, seniors, in regions, and there is no good balance in this declaration of the minister of finance about investing in Canadians and tax cuts."
The fiscal update faces its first major challenge today when it will be the subject of a confidence vote in the House of Commons.
The update delivered Tuesday by Finance Minister Jim Flaherty included a promise to slash the GST to five per cent, along with major cuts to personal income tax and corporate tax rates.
The tax reductions add up to about $60 billion in savings over the next five years.
Dion said the Liberals share the position of "all" economists, that the GST cut is not a good move for Canada. He said he would prefer to see income tax reductions.
The fiscal update will be introduced as a confidence motion, meaning an election would be triggered if the opposition united to vote down the document.
The NDP and Bloc Quebecois have already said they will oppose the fiscal update, which makes good on the Tories' 2006 promise to reduce the GST to five per cent.
Flaherty said the GST cut will not be implemented in time for Christmas, but will take effect on Jan. 1, 2008, since the government must legally give 60 days notice before putting the plan into action.
Flaherty called yesterday's announcement "good news" and said it rewards Canadians for hard work and a strong economy.
"We're being practical and pragmatic and actually helping Canadians," Flaherty told Canada AM on Wednesday, noting that retailers are especially happy with the news.
Other highlights include:
- An increase in the basic personal amount exemption to $9,600 from $8,929, retroactive to Jan. 1, 2007;
- Two years later, on Jan. 1, 2009, the basic personal amount exemption will be increased to $10,100;
- Reducing small business income tax to 11 per cent by 2008;
- $10 billion in federal debt relief; and
- The lowest personal income tax rate moves to 15 per cent from 15.5 per cent, effective Jan. 1 2007, undoing a change made in the first Conservative budget.
CTV's Ottawa Bureau Chief Robert Fife said the update goes beyond a simple prediction of the coming fiscal season, and actually borders on being a full budget.
"An economic statement is simply the forecast of where the economy is going. A mini-budget usually has one or two tax measures, and a full budget has tax measures and spending measures, so this is just bordering on a full budget," Fife said on Wednesday.
NDP Leader Jack Layton said the fiscal update promised little that would help impoverished Canadians.
"It was an opportunity to close the widening prosperity gap. Instead, it widens that gap," said Layton, adding that banks and oil companies benefit while communities suffer.
Liberal finance critic John McCallum has said his party supports the corporate tax cuts and income tax reductions included in the update package, but is opposed to the GST cut. Still, he said the issue would not justify bringing down the government, and Canadians don't want to deal with an election in the two months leading to Christmas.
"We're going to bring the government down at the appropriate time," McCallum told Canada AM on Wednesday.
"And at that time, you will see a Liberal vision of Canada with not only tax cuts but social programs, help for poor people, aboriginals and so on versus a Conservative vision. And I'm confident at that time that Canadians will go for the Liberal vision."
NDP finance critic Peggy Nash said the fiscal update provides benefits for the oil and gas sectors and major banks, but doesn't do enough for some of Canada's neediest.
"Our vision is targeted tax measures that would affect struggling sectors like the manufacturing sector, struggling Canadians like those who are really being squeezed right now in a country that's so prosperous, but they're being left behind," Nash said.
"We would invest in people and communities, have targeted tax cuts, but really close the prosperity gap. That's our vision for Canada."
