Canadian premier defends asset tax

PREMIER Mike Harcourt of the Canadian province of British Columbia has vigorously defended his much-criticised asset tax.

And he said in Hongkong yesterday it might even remain after its original intention of reducing his government's deficit was achieved.

Mr Harcourt maintained that his tax policies had given his province ''a sense of hope''.

Hongkong Bank and Cathay Pacific have been among companies in the territory which have criticised the taxing of assets rather than income or profits, arguing that it discouraged investment.

''It is deficit-reduction driven rather than ideologically driven,'' Mr Harcourt said.

Business in his province had told him to get the deficit down, and the only way to do that was by raising taxes, he said.

Mr Harcourt has a reputation as a political bruiser. When in opposition he described the deal to award a large site in Vancouver to a consortium led by Hongkong tycoon Li Ka-shing as the ''dumbest deal of the century'', saying it should have been awardedto local companies instead.

Just 30 minutes away from lunch with Mr Li and his son Victor yesterday, Mr Harcourt was keen to point out that his criticism was of the government and did not imply any criticism of Mr Li.

Mr Harcourt has just arrived from China, where he met Vice-Premier Zhu Rongji and senior managers of CITIC, which owns a pulp mill in British Columbia.

He also met Governor Chris Patten yesterday, and senior executives from HSBC Holdings and others before flying to South Korea and Japan.