Quebec government hangs by a thread as budget fuels standoff

Quebec PremierJean Charest refuses to back away from promised tax cuts and warned opposition parties they will be judged harshlyif they defeat the budget and bring down the government.

Charest spent most of Friday defending Finance Minister Monique Jerme-Forget's contentious budget, which includes $950 million in tax cuts funded in part by $700 million in federal transfer payments.

Charest insisted there is no room for compromise in the budget, despite opposition parties' distaste for it.

"We have delivered a very solid budget, weve worked with opposition parties, but in the end, I cant put a gallon in a pint," he told reportersin Quebec City.

The premier said he will push ahead with the income tax cuts despite protests from Quebec's Official Opposition Action Dmocratique du Quebec and the Parti Qubcois, which reaffirmed their intention to reject the budget as it stands.

A feisty Charest dared them to follow through with their plans and send Quebecers to the polls for a second time in four months.

"I've just been through a whole election campaign in which the issue during the campaign is that you should sanction the government because they have not met their commitments on tax cuts.

"Now I have two opposition parties who say 'You know what? You should vote against the government because they respected their commitments on tax cuts.'"

"Well, if that's the campaign they want to lead, good luck."

Charest wasalsoon the attack at the national assembly Friday morning, where he faced a barrage of criticism from the opposition.

"It didn't matter what we put in the budget, you would have voted against it," Charest shouted. "But we will defend the middle class."

If the opposition defeats the budget itcould trigger the Liberals'downfallin the national assembly less than two months after the party made history as the first minority government in Quebec in more than 130 years.

ADQ Leader Mario Dumont saida vote that could trigger an election is a risk he's willing to take if it means standing by his party's beliefs.

"We have to act according to our principles, and the rest is just what I observe," he said on Friday.

Charest's budget fails toreflect hispolitical reality and status as a minority government, Dumont warned.

"I observe that there were negotiations between the PQ and the Liberals up to this week. And I understand Mr. Charest has not listened to anything."

Jrme-Forget insists opposition concerns factored into the budget.

"Be it transparency, be it the debt, taking care of infrastructure, taking care of the elderly.We have placed a concern that this budget reflects equally their objectives."

The ADQ is staunchly opposed to proposed tax cuts and reiterated its desire to see Quebec's transfer payment windfall used to pay down the province's growing debt and to increase spending on health care and education.

'Not in a good position'

The PQ also flatly rejected the tax cuts, calling them "irresponsible" given Quebec's health care and education needs.

"Mr. Charest is not in a good position at this point," PQ finance critic Franois Legault warned late Thursday night.

The ball is back in Charest's court now after house leader Michel Bissonnet ruled opposition parties can't amend the budget, according to regular national assembly procedure.

The Liberals' only recourse to avoid a possible vote against the budget is for Charest to withdraw it and draw up a new one.

"He has in his hands all the power to make the changes that are necessary in order to have our support," Legault said.

The budget will undergo three days of formal debate at the provincial legislature starting Tuesday.

Liberals promised tax cuts in the last election

"We felt this time, lowering taxes by $950 million, was the right time," Jrme-Forget said on Thursday after she tabled her first budget as finance minister.

The Liberals were set on delivering the tax cuts after failing to fulfil tax relief promises made in the 2003 election campaign.

Then Charest drew fire in the 2007 provincial election when he announced a new round of income tax cuts after federal Finance Minister Jim Flaherty granted Quebec $700 million in transfer payments to resolve the so-called fiscal imbalance.

Charest insists tax cuts are what Quebecers want. "The Liberal party is the only party to defend the interests of the middle class."

PQ will have to move fast

If the budget vote does indeed trigger an early election, the PQ will need to move quickly to avoid entering an election campaign without a permanent leader.

Former leader Andr Boisclair stepped down in early May after suffering a lengthy backroom flogging from party members frustrated by the PQ's losses in the last provincial election.

Former PQ cabinet minister Pauline Marois is the only candidate to step up for the job.

Quebec's election in March left the Liberals with 48 seats in the 125-seat national assembly, compared to 41 for the ADQ and 36 for the PQ.

The national assembly will vote on the budget next Friday.