Carbon tax plan risky, Dion warned

OTTAWA, ONTARIO - Liberal Leader Stéphane Dion gave a strong defence of the idea of a carbon tax in the face of warnings from within his party that the proposal could be political suicide.

Dion's defence came just hours after Liberal MPs privately voiced concerns that the party was losing the public relations war even before its strategy is released.

Caucus members "massively and aggressively" warned Dion that the sales job thus far has been abysmal, according to one MP, leaving the Tories to paint the plan as a tax grab that will hit motorists and homeowners.

"They (the Liberals) have decided, in this time of rising gas prices, that the key to winning the next election and keeping their party together is to raise those gas prices on ordinary Canadians. That is the plan their leader is going to be unveiling in the weeks ahead," government House leader Peter Van Loan told the Commons.

But Dion accused the Conservatives of twisting the truth, and he voiced confidence that Canadians would be receptive to the Liberal ideas.

"I'm always confident when you speak to the intelligence, the mind, the big hearts of Canadians, and Canadians see that this government will lie again and again and again," Dion told reporters after question period.

Dion will speak to the Canadian Club in Toronto. In a speech titled "Bridge to the Future," he's expected to talk about his party's economic proposals and perhaps hint at the Liberal strategy for dealing with greenhouse gases.

But don't expect the Liberal leader to talk about a carbon tax. At their weekly caucus meeting, the Liberals got a caution from party strategists against describing their fledgling proposal as a "tax" – a sure-fire bet to drive away voters.

Dion later said that rising fuel prices can't be pinned on his party.

"It's true that the cost of fossil fuels are going up. That has nothing to do with the Liberals," he said. "It is because of the international situation where the demand for oil and gas is going faster than the supply."

But he said that Canada needs a plan to deal with the new reality that "cheap oil is passé" and began selling his plan as a way to help those hard hit by high fuel prices.

"We need to have the good strategies and especially to help the middle class and the people in need," Dion said, promising that the Liberal plan will be unveiled in the weeks ahead.

In an opinion piece written for May issue of the magazine Policy Options, Dion concedes that pricing carbon is a "work in progress."

"Economists increasingly point to the benefits of taxing things we want less of – like pollution – while lowering taxes on things that we want more of – like productivity and income," Dion writes.

That could be a hint of the principle behind the Liberal plan – slapping a tax on fossil fuels while reducing taxes on other fronts to ensure it is revenue neutral.

Liberal environment critic David McGuinty suggested yesterday the Liberal plan would contain broad measures to help Canadians grapple with the new costs of fighting climate change.

"There are a whole series of fiscal and other measures that can be brought to bear that'll help Canadians make the shift. How they invest in their homes, energy efficiency investments, how we get around, production processes. Businesses are screaming out for new technologies," McGuinty said.

"Why would we want to lose this race?" he said.

But he conceded the party will need a well-developed sales pitch to explain the carbon plan to voters.