Ignatieff says he'd only hike taxes as last resort

OTTAWA - Michael Ignatieff denies saying he'd have to raise taxes to pay off a soaring federal deficit, but he's not entirely ruling out such a move either.

The Liberal leader indicated Wednesday he'd hike taxes only as a last resort, if other measures to eliminate ballooning deficits failed, and only once the economy has recovered from the current recession.

"No honest politician, faced with an $80-billion deficit, will take anything off the table because Canadians do not want, they're allergic to, long-term structural deficits," Ignatieff said during a visit to Niagara Falls, Ont.

"But I will do anything I can, and any sensible politician will do anything they can, to avoid increasing the tax burden on Canadians, especially now and hopefully later as well."

Ignatieff's clarification did nothing to stop his political rivals from pouncing on his initial comments, in which he seemed to suggest that tax hikes are inevitable.

"His position is that he's going to raise taxes. Which taxes will he raise?" Transport Minister John Baird said in an interview.

Baird vowed that Prime Minister Stephen Harper's Conservative government won't hike taxes.

"We are categorically not planning to raise any taxes. We're the party that cuts taxes," he said.

"I think the very best way to balance budgets and create jobs is through economic growth and tax increases kill jobs."

NDP Leader Jack Layton also piled on, saying tax hikes would be "the wrong approach" to eliminating deficits.

In an interview, Layton said a better approach would be to invest in things like energy efficiency and green bonds, investments that will generate the jobs of the future, spark economic growth and fill federal coffers without hiking taxes.

Both Layton and Baird scoffed at what they saw as Ignatieff's attempt to backpedal on the issue, saying the Liberal leader is a serial flip-flopper who repeatedly changes his tune on issues.

"I certainly see (a pattern) because he's for and against things on an ongoing basis. It leaves you wondering what he would do," Layton said.

Ignatieff was forced to clarify after he appeared Tuesday to have told a chamber of commerce meeting in Cambridge, Ont., that tax hikes are inevitable.

He was reported to have said "we will have to raise taxes."

"I said no such thing," Ignatieff insisted Wednesday.

Ignatieff said he simply explained to a questioner that there are various options to eliminate the $80 billion in deficits that the Harper government intends to rack up over the next two years -- including spending cuts, spending reallocations and economic stimulus to spur economic growth.

Ignatieff said he only mentioned tax increases as a possibility when the questioner "asked a hypothetical question: What if none of that works?"

Ignatieff stressed that he would never raise taxes as long as the economy is struggling to recover from the recession.

"Any sensible government wants to keep taxes as low as absolutely possible in a recession and as we come out of a recession the worst thing you could do would be to raise taxes," he said.

"We need to do everything we can to get us out of the recession and that means keeping tax rates competitive and low.

"And then as growth returns, then revenue returns and you can begin to clean off that deficit."