Tax cuts were top of mind Thursday, after Conservative leader Stephen Harper announced his party's plan to slash the much-maligned GST.

Harper made the announcement to a crowd of supporters in Mississauga, Ont. Thursday morning.

"I believe that all taxes are bad," Harper said as he outlined the Conservative pledge to slash the Goods and Services Tax by two per cent over five years. "Better taxes are lower taxes."

Tory Leader Stephen Harper announced that if Canadians elect a Conservative government on Jan. 23, his party would reduce the GST by one per cent immediately. Then, another one per cent would be shaved off in the following four years -- ultimately bringing the GST down to five per cent.

Harper said the immediate cut would result in $4.5 billion every year going back into the pockets of Canadians. An average family of four with an income of $60,000 a year would save about $400 annually as part of the proposal.

"When the GST cut is fully implemented, the total benefit will be much greater," said Harper.

"The purpose of this tax cut is to provide broadly based, progressive, fair tax relief to every single Canadian," Harper told reporters in the crowd gathered at a suburban electronics outlet west of Toronto.

Coming just as many Canadians are preparing for a busy season of holiday shopping, the issue is a potentially popular one. It also has the added bonus, for the opposition parties at least, of placing the minority Liberals in the awkward position of having to defend a tax they once vowed to abolish altogether.

The tax Canadians famously love to hate was introduced by the Tory government of former prime minister Brian Mulroney in 1991. Two years later, the Liberals won power from Mulroney's Conservatives, partly in thanks to their pledge to scrap the tax.

Citing the massive budget deficit, however, Liberals reneged on their promise after taking Jean Chretien moved into the Prime Minister's Office.

According to Harper, in the 12 years since, the amount of money government has collected in GST, "has increased by 100 per cent."

"It has doubled. Has your income doubled? Have government services doubled? Canadians have a right to ask where the doubled GST revenue is being spent."

He criticized the Liberal government for providing "benefits for the few" despite enjoying a surplus of $63 billion in the last eight years.

"Government has money to waste, government has money to steal, government has money to spend on benefits for a few. It's time for benefits for mainstream Canadians, hard-working people who pay their taxes and play by the rules."

A 'Clear Choice'

Martin, whose Liberals unveiled a five-year, $30-billion income tax-cut plan before the election was called, said Thursday that cutting the GST would be wrong.

Instead, he said his party is focused on "more sensible" suggestions.

"Now we have a very clear choice between two plans: and I believe that mine is more fair, particularly for the middle class," he told reporters in Montreal. "We want middle class Canadians to keep more of their paycheques. We think it's fair and more equitable."

Martin added that he's not simply promising tax cuts, but has also vowed to raise old age security pensions as well as energy rebates for Canadians who earn lower incomes. But when the prime minister was asked if he would consider cutting the GST, he was blunt: "I don't believe that is the path to follow."

"Canadians have been down this road before, they've heard this story. I believe, unequivocally, we should focus on cutting personal income tax, particularly for the middle class."

Campaigning in Oshawa, Ont., NDP Leader Jack Layton suggested that both his rivals are focused on the "wrong priorities."

"Deep tax cuts, right now, are not what Canadians are looking for," Layton told reporters. "What they are looking for is to protect our health-care system, to make sure post-secondary education is available and affordable."

Visiting ridings in the community east of Toronto where his party lost close contests during the last election, Layton instead chose to aim his campaign message at bracing for 3,000 job cuts at General Motors there.

For his part, Bloc Quebecois Leader Gilles Duceppe said he would need to see more details on the Tory proposal before he could comment.

But he told reporters in Laval that a blanket GST reduction plan would end up hurting revenues in Quebec, and that such a plan fails to recognize the "fiscal imbalance" that exists between Ottawa and the provinces.

He said the Bloc also wants provinces to get more taxation powers, and that he wants to see how the Conservative plan would affect that.

Duceppe said the Bloc's position on the GST is to abolish it on some goods -- such as children's clothing and on books. "Because when we tax books, we tax knowledge," he said.

Struggle to set agenda

One day after the Bloc released its campaign platform, however, Duceppe was more consumed by questions relating to his party's proposal for fielding national teams at international sporting events.

I would like to see the same rules as those applying to Scotland or Wales or Northern Ireland,'' Duceppe said during a news conference.

"They have their own players in the soccer World Cup or the rugby World Cup. If it's possible in Great Britain, it could be possible in Canada.''

In his second-straight day in the election battleground of Quebec, Martin poked fun at the Bloc suggestion.

"I suppose that goes with his army and his spies," he joked, referring to Duceppe's sovereignty wish list said to include an independent Quebec army and intelligence service.

Layton, meanwhile, used his appearance in Oshawa to outline the NDP's four-point strategy to help the ailing auto industry. Improved border links between Canada and the U.S., as well as expanded free-trade talks with Japan and Korea are crucial, he said.

Calling for government subsidies to help automakers with research, development and retooling for the production of more energy-efficient vehicles, Layton said he would make the plan a condition of supporting any minority government.

But the campaign story dominating newscasts and water cooler conversation was the one started by Harper.

"We've had thousands of hits on the website today on this, and we've tracked all the political stories," globeandmail.com writer Jeff Sallot told CTV's Mike Duffy Live.

Surveying traffic on the paper's website, Sallot said the GST story has by far attracted more clicks than any other.

"This is the water cooler story of the campaign so far -- even more so than the Quebec separatist hockey team, unbelievably."

After faltering in the early days, it's likely a welcome turnaround for the Conservative leader who on the first full day of campaigning touched off a firestorm when he restated his promise to ban future same-sex marriages if that's the will expressed in a free vote in the Commons.

The following day, Harper's call for the creation of a special prosecutor charged with investigating politically sensitive federal crimes revealed differences with his No. 2.

In a back-and-forth that overshadowed the main Conservative campaign message as the same-sex comment had done the day before, Harper and Conservative Deputy leader Peter MacKay contradicted one another on the issue.

For Strategic Counsel pollster Allan Gregg, Harper's success with the GST proposal could foreshadow a winning formula for controlling the debate and perhaps the campaign.

"The conventional wisdom is that issues do not drive voting choice," Gregg said on CTV's Mike Duffy Live. "But in Stephen Harper's instance, I think that policy is his absolute best defence against a personality that people really haven't been drawn to."

"By doing lots of policy, especially doing economic policy, I think Harper is appealing to his strengths right now."

As for the merits of slashing the GST, though it would be popular move the verdict's out on whether it would be a sensible one.

Heading into the holiday season, the idea of consumers paying less GST is a happy thought for Future Shop salesman Jafra Husein.

"As a retailer we love it," he told CTV News. "It motivates the buyer."

But some economists say the promise could turn out to be a bit of good politics, leading to an ultimately bad policy.

Bruce Anderson of Decima Research told The Canadian Press that cutting the GST may not add up as nicely as it sounds.

"Canadians have in the past felt somewhat more drawn to a GST cut than an income tax cut because they saw it as being more visible, and potentially more rewarding," he said.

But in light of budget surpluses that make tax cuts a possibility, "it's not so clear that they would favour the consumption (tax cut) over the income tax cut, especially if there were a vigorous debate about the economic advantages of one or the other."

Among the criticisms levelled at the GST cut is the disportionate 'savings' it would afford people who spend more. Lower-income Canadians, because they're not spending as much, would not realize as much savings.