Dion to unveil carbon plan Thursday: report

TORONTO (Reuters) - Liberal leader Stephane Dion will unveil his long-awaited carbon tax plan on Thursday, promising that the policy would mean no increase in fuel prices, a newspaper reported on Tuesday.

Dion will outline a plan that would shift a federal excise tax of 10 cents on a liter (0.26 U.S. gallon) of gasoline into a broad-based tax on home-heating oil and other fuels, an unidentified source told the Globe and Mail. The report appeared on the paper's Web site on Tuesday evening.

Dion's plan would cut income taxes for households and businesses to offset the costs of the carbon tax, making the overall plan "revenue neutral," the paper reported.

The Liberal leader on Thursday will tell Canadians the plan would help protect the environment while creating what he will describe as "new generation of green-collar jobs," the source told the newspaper.

Dion, who has been ridiculed by the governing Conservatives in a series of ads attacking the tax plan, has signaled for weeks that he would unveil it formally. But the announcement has been delayed amid concern over how Canadians would greet a new tax policy at a time when pump prices are soaring.

The ads refer to "Dion's tax on everything" and dispute the Liberal position that the carbon tax would be balanced by income tax cuts.

The Liberals are presenting themselves as green and see the issue as a weakness of the minority Conservative government, whose home base is in the energy-rich province of Alberta.

Dion won the leadership of the Liberal Party 18 months ago on a green platform and appears ready to defy conventional political wisdom that in tough economic times voters are less inclined to make sacrifices for the environment.

($1=$1.02 Canadian)

(Reporting by Frank McGurty; Editing by Eric Walsh)