Canada's Harper to drop plan to end party subsidies

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TORONTO (Reuters) - Canadian Prime Minister Stephen Harper will drop a plan to eliminate direct public subsidies for political parties, his spokesman said on Saturday, after the opposition threatened to topple his Conservative minority government.

"We're removing that from the table," said Kory Teneycke, chief spokesman for Harper, referring to the party financing proposal. He said the government would say more about the issue on Sunday.

The plan to stop the practice of paying parties C$1.95 (one pound) for each vote they received in the last federal election was included in Finance Minister Jim Flaherty's fall fiscal and economic update, presented to Parliament on Thursday.

Opposition parties reacted angrily to the package, saying they were disturbed by the government's decision not to include a new economic stimulus despite evidence the global financial crisis was starting to weigh heavily on Canada.

The Liberals, the left-leaning New Democrats and the separatist Bloc Quebecois were also angered by the proposal on party financing, saying it was a naked power grab by the Conservatives, who were re-elected on October 14.

The parties have threatened to vote against the budget plan when it is brought to the floor of Parliament. That would signal no confidence in the government and raise the possibility of another round of elections. The Liberals and New Democrats have also discussed forming a coalition government.

The Conservatives have said the measure to stop direct party subsidies, which cost C$27 million ($22 million) a year, was part of an overall belt-tightening move.

An end to subsidies would hurt the opposition parties more than the Conservatives, who have been more successful in grass-roots fundraising.

(Reporting by Randall Palmer; Writing by Frank McGurty; Editing by Peter Cooney)

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