Canada's Liberal government, on the brink of calling a national election, is under increasing pressure from its own ranks to produce an alternative to a Conservative Party program of tax relief for homeowners.
The Conservative program, modeled after the American tax system, provides deductions for mortgage interest and property taxes. It was widely acclaimed by voters when unveiled last fall in the middle of campaigning for 15 federal by-elections.
Since then, the rpogram has been attacked by economists and the government, but it remains so politically popular that the Prime Minister Pierre Trudeau's cabinet is considering four alternative schemes.
"There's just an incredible debate in the party," said Lorna Marsden, vice president of the Ontario wing of the Liberal Party. "Anywhere I go in the country, people bring it up."
As a result, the government is being pressed by constituency organizations and urban back-bench members of Parliament to produce some tax relief scheme for homeowners.
Having attacked the Conservatives' program, the Liberals hardly can imitate it. in fact, two Liberal officials recently went to Washington to discuss the American system.
They reported to the Liberal caucus that U.S. officials and independent economists had warned the Canadian government against introducing the idea.
"The recommendation of all government officials and all independent economists with whom we met was to the effect that a system of mortgage interest and real estate tax deductibility is to be avoided at all costs," the Liberals reported.
"The deductibility feature certainly favors upper-income earners, not only because of the progressive nature of the rate structure in the United States, but also because homeowners in 1976 had an average income of $16,000 while renters had an average income of $7,400," they said.
Nonetheless, the Liberals know the Conservative program has a strong political appeal to middle-class Canadians who, like many of their American counterparts, feel overtaxed.
No matter how often Liberal cabinet ministers have attacked the Conservative program as fiscally irresponsible and socially regressive, the Liberals' private polls have shown that the Conservatives have git upon a political winner.
The Conservative program would allow income tax deductions of up to $5,000 for mortgage interest and up to $1,000 for property taxes. The program would be phased in over four years and would cost $1.5 billion, although Liberals say the price tag would be twice as high.
The Liberals, who cut government spending by $2 billion last fall, argue that Canada cannot afford the Conservatives' program. But they are studying four tax credit and shelter allowance proposals of their own, one of which will probably be unveiled in the early stages of the coming campaign.