12/21/2011 11:06 EST | Updated 02/20/2012 05:12 EST

Ontario Corporate Tax Cut May Be Delayed; Tories Insist It's A Tax Hike

TORONTO - Ontario's minority Liberal government should not "get into bed" with the New Democrats and delay a cut in Ontario's corporate tax rate, Progressive Conservative Leader Tim Hudak said Wednesday.

The province is scheduled to cut the business tax rate from 11.5 to 10 per cent in 2013, but the NDP wants that delayed, saying the government can't afford billions of dollars in tax cuts while it's under a credit watch because of a $16-billion deficit.

Now it looks like the Liberals will postpone the tax cut in exchange for NDP support, said Hudak.

"I talked about this during the campaign, that I expected Dalton McGuinty, if we were in a minority government situation, to use the NDP as an excuse to do what he always does," said Hudak.

"After every election campaign, Dalton McGuinty has some excuse and then he raises taxes and ramps up the spending."

Hudak was at the cabinet table when Ontario's last Conservative government delayed tax cuts by one year in 2002 in response to the 9-11 terrorist attacks.

However, he now says delaying a tax cut amounts to a tax hike, something he warned was absolutely the wrong policy when the province needs more private sector jobs.

"Why would you increase taxes on people we want to create jobs in this province when we have half-a-million men and women who are out of work," said Hudak.

"Hitting them with a tax increase during an economic downturn is going to cause even more job losses in Ontario and hurt our savings funds."

The Tories want a legislated wage freeze for about one million public sector workers in Ontario to help trim the deficit, but the NDP opposes that, and says it's wrong to give businesses a tax break when families are struggling to pay the bills.

"The big problem that we have is that this direction of across-the-board corporate tax cuts haven’t paid off," said NDP Leader Andrea Horwath.

"We haven’t seen investment in Ontario or massive job creation. In fact all we’ve seen is companies beef up their bottom lines and shovel dollars into their cash reserves."

Neither McGuinty nor Finance Minister Dwight Duncan would confirm the Liberals intend to stick to the original schedule when they met with the media earlier this week.

Duncan wasn't available to comment Wednesday, but refused to say late Tuesday whether or not the Liberals would delay the tax cut.

"Any new policies, and change of policies, any reaffirmation of policy will occur during the budget," Duncan told reporters.

McGuinty seemed to want to stick to the original plan for the corporate tax cut when he met reporters Monday in his last media availability of 2011, but he confused the situation at first by saying ''Yeah'' when asked about postponing the cut.

"That wasn’t a yes," McGuinty quickly clarified.

"We have got to take a look at corporate tax rates in other parts of the world, and when we move ahead with the plan we have in place, we’ll be in the middle-average in terms of our competitiveness for our corporate taxation levels."

McGuinty never said he wouldn't delay the tax cut, noted Hudak.

"My message to the premier today is very simple, very straightforward: don’t be a push over when it comes to business taxes," he said.

Horwath originally wanted corporate taxes hiked back up to 14 per cent, but has compromised in hopes of working with the Liberals, and now simply wants the government to "hit the pause button" on taking the tax rate down to 10 per cent.

Voters don't want to see her making threats about bringing down the minority government if the NDP doesn't get its way, she added.

"By simply throwing down the gauntlet and drawing lines in the sand, I don’t think you get anywhere," said Horwath.

"The challenge is going to be for the Liberal government, which has had a majority for so long, to learn how to do a little bit more of that compromising as well."

The province is facing threats of an expensive credit downgrade if it cannot stick to its deficit reduction targets and eliminate the red ink completely by 2017.