09/09/2011 02:26 EDT | Updated 11/09/2011 05:12 EST

Randy Hillier Tax Dispute: Tory Candidate's Squabble With Revenue Canada Puts Hudak In Awkward Position

TORONTO - Tim Hudak's campaign mantra that Progressive Conservatives are the only ones who will defend hardworking taxpayers was derailed Friday by revelations that a high-profile Tory is embroiled in a long-running tax dispute.

After making his economic pitch to a Toronto business audience, Hudak came to the defence of rural Conservative Randy Hillier, who reportedly owes about $15,000 in unpaid taxes to the Canada Revenue Agency.

The Tory leader said he hasn't spoken to Hillier since the tax squabble went public, but party officials have been in touch with him.

"Randy is negotiating the payment for those taxes as we speak, so it will be taken care of," Hudak said after a speech to the Economic Club of Canada.

"He assured us that he is negotiating a settlement for those taxes."

Hudak brushed off suggestions that Hillier's dispute may have undermined the Tories' campaign message of defending families who "play by the rules," but wouldn't say if he'll dump the rural activist.

"I'm satisfied that Randy will be good to his word in negotiating a payment for those taxes," he said.

Liberal campaign co-chair Kathleen Wynne called the Tories "hypocrites."

"If Tim Hudak were a real leader he would tell his senior caucus member to pay his back taxes now," she said in an emailed statement.

CTV News obtained documents from the provincial land registry that shows the government placed two liens on property owned by Hillier and his wife more than a year ago.

One of the liens is $9,017 while the other is for $5,863.

"A few years after the sale of some property owned by my wife, a dispute arose with the Canada Revenue Agency on the amount of tax related to the sale," Hillier said in a statement late Thursday.

"There is still an outstanding amount owing by my wife. My wife has engaged with CRA and working to reach a settlement and expects this matter to be resolved very soon."

Hillier, who is seeking re-election in the eastern Ontario riding of Lanark Frontenac Lennox and Addington, is no stranger to controversy.

The self-described libertarian and past president of the Lanark Landowners Association was accused of working against longtime Tory Norm Sterling by campaigning for another candidate for the party's nomination.

Sterling, represented an Ottawa-area riding for 34 years, lost the nomination to Jack MacLaren and complained that the party did nothing while Hillier helped his friend defeat him.

The nomination battle also angered former premier Ernie Eves, who warned that a "few individuals" were trying to bring Tea Party-style politics to the province.

The Liberals pounced on the remarks and have resorted to calling Hudak "Tea Party Tim" in many of their war room missives.

They've accused the Tories of intolerance because they oppose a Liberal plank that would provide up to $10,000 to employers who hire new immigrants.

The debate over the proposed tax credit has quickly emerged as a hot-button issue in the provincial election debate, with Hudak calling it an "affirmative action program for foreign workers."

It calls for a tax credit of up to $10,000 to offset necessary training costs for employers who hire professionals such as architects, accountants and engineers.

The employees must have been trained abroad, become Canadians citizens, been in Canada for under five years and not previously been able to find work in Ontario in their field.

But the Tories launched two new radio ads Friday which give the impression that the tax credit only applies to those outside Ontario.

"Ontario taxpayers need not apply," one ad says. "Foreign workers? $10,000. Each."

The second ad also takes aim at the immigrant tax credit, under the guise of Premier Dalton McGuinty's office voicemail.

"If you're looking for a job, press one," a voice says . "If you pay taxes in Ontario, press two."

After the buttons are pressed, the voice intones, "Sorry, Ontario residents need not apply."

Hudak defended the ads, saying prominent Liberals like campaign chair Greg Sorbara and Finance Minister Dwight Duncan have said that the program will help foreign workers get jobs.

"I just disagree with this as an economic policy," he said.

"It's wrong and it runs against the values of the vast majority of Ontario families. I'll stand against it."

The Liberals have accused Hudak of hypocrisy because he introduced legislation last year that included a 10 per cent wage subsidy for employers who hired a skilled newcomer.

His Changebook platform also includes a promise to provide a tax credit for employers who sponsor language training for immigrants.