TORONTO - Ontario families will pay more in taxes each year because of the 13 per cent harmonized sales tax that kicks in July 1, but the province's businesses need the tax change to become more competitive, Premier Dalton McGuinty said Tuesday.

"I think that for families at the outset there will be an increase in taxation," said McGuinty, who conceded no one will hold a parade to honour him for introducing the new tax.

"Experience tells us that over time those savings (for businesses) will in fact be passed on to consumers.

"It's not going to happen all at once."

McGuinty said he was confident Ontario residents understand the need to introduce the HST so businesses will no longer have to pay the provincial sales tax on goods they use, allowing them to higher more staff and lower prices.

"We've got to ensure that our businesses can compete in a global economy," he said.

"I'm not saying this is an easy thing to do, and I am saying there is going to be new taxes on some items... but this is all about building a stronger Ontario and making sure we've got those jobs."

The New Democrats released a study Monday suggesting families will pay hundreds, if not thousands of dollars more in taxes once the single sales tax takes effect.

McGuinty said he hadn't seen the study, and cautioned people to be wary of the NDP's numbers.

"I cannot accept the calculations put forward by the NDP," he said.

The NDP used a Statistics Canada database to calculate the average Ontario family will pay $794 more in taxes every year because of the HST if businesses don't pass on their savings to consumers, and $638 a year more if businesses do lower prices to reflect lower input costs.

The premier pointed to other studies showing low-income families would be better off under the HST because of income tax cuts and government rebates, while it would be a "wash" for middle-income households while the wealthy would indeed pay more taxes.

The government will offer one-time payments of up to $1,000 for families and $300 for singles to offset the initial impact of the HST, noted McGuinty.

"I'll leave it to families; they can look to the NDP for numbers or they can look to independent reports," he told the legislature.

McGuinty said he was confident voters would support his decision in next year's provincial election.

"Reality is our friend, and over the course of time families will actually begin to live with the experience of our new system of taxation in Ontario, and then we'll have a rational, thoughtful discussion about what it means," he said. "I believe this is the right thing to do (and) people get to make a call on that."

The Liberal government has been trying to hide the real impact of the HST on families, said NDP Leader Andrea Horwath.

"It's a shift of taxes that takes money out of families' pockets and puts it into the business community," said Horwath. "This harmonized sales tax is going to hit people when they're already down."

The Progressive Conservatives said the HST is the wrong tax at the wrong time, and accused McGuinty of being "increasingly out of touch" with Ontario families.

"For over a year we've heard Premier McGuinty spin this crazy tale that the HST was going to actually benefit Ontario families," said Hudak. "We know the truth, it's a big tax grab that's going to hurt families and seniors most."

The HST will apply to about 17 per cent of consumer goods and services that are currently exempt from the eight per cent provincial sales tax, including energy costs such as home heating fuel and gasoline.

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