Liberal leadership hopeful Martha Hall Findlay called Thursday for an eventual increase in the GST, warning against letting her party's policies be dictated by fear of the Conservative attack machine.

Findlay said she knows her stand risks giving ammunition to the Tories, who love nothing better than to accuse opposition parties of being reckless tax-and-spenders.

But Liberals need to have the courage of their convictions, she said, and must stand up to the relentless Tory spin machine, which eviscerated the last two Liberal leaders.

The former Toronto MP pointed out Thursday that Liberals — and most economists — opposed Prime Minister Stephen Harper's decision to cut the seven per cent goods and services tax — first to six per cent, then to five.

"You can't say that it was a bad idea to drop it and not have the guts to say that, when the economic circumstances are right, that you would consider raising it back up. It's inconsistent," Hall Findlay said in an interview.

She added that Liberals have "run away" from the issue over the past few years because they were afraid of Tory reprisals.

"Well, I'm not afraid of Stephen Harper. The right policies are the right policies."

Not all Canadians will like the idea of paying more GST, Hall Findlay acknowledged. But the third-place Liberal party won't win back support until it starts showing some conviction on difficult issues, she said.

"Not everybody in this country is going to agree with everything, but they're certainly not going to support a party that doesn't have the courage to stand up for what it believes. And if we don't feel we can stand up for what we believe because we're somehow afraid of Stephen Harper's attack ads, then we have a way bigger problem."

Advocating tax hikes risky

Michael Ignatieff, the Liberals' last permanent leader, ran into trouble on the GST just days after taking the party's helm in 2008 when he refused to take a possible increase off the table. He was pounded by the Tories and eventually backtracked.

Nevertheless, his initial openness to a GST hike became fodder for one of the Tories' subsequent attack ads, which ominously dubbed Ignatieff a "Tax Hiker."

Hall Findlay argued that Harper's GST cut pushed Canada into a structural deficit even before the 2008 recession hit. She stressed she wouldn't raise it again now, when the economy is still sluggish, but she would "absolutely" consider doing so once the economy rebounds.

As for the inevitable Conservative charge that she's a tax-and-spend Liberal, Hall Findlay said she wouldn't use the additional billions in revenue a GST hike would produce to increase government spending. She'd use it eliminate the deficit racked up by the Harper government and start paying down the national debt.

In any event, she said the Conservatives have some nerve accusing other parties of being reckless spenders given their own record of "borrow and spend."

"Harper, in the first two years of coming into government, had the largest spending budgets in Canadian history — before the crisis ever hit," she said.

"These guys have absolutely no credibility when it comes to fiscal prudence."

Hall Findlay is one of seven officially registered candidates vying to become the next Liberal leader. An eighth candidate — Ottawa lawyer David Bertschi — submitted his nomination papers Thursday and a ninth — former cabinet minister Martin Cauchon — is poised to get his papers in by Sunday's deadline.

Registration includes payment of a stiff $75,000 entry fee.

Would-be contender David Merner, former president of the party's British Columbia wing, has announced he's withdrawing from the contest. He's expected to throw his support to Vancouver MP Joyce Murray, who shares his belief that Liberals need to co-operate with New Democrats and Greens in the next election to ensure defeat of Harper's Conservatives.