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Ontario joins national HST club in passing bill to harmonize tax with Ottawa

TORONTO - The political drama surrounding Ontario merging its sales tax with the federal GST culminated Wednesday with the Liberal government passing the harmonized sales tax into law.

TORONTO - The political drama surrounding Ontario merging its sales tax with the federal GST culminated Wednesday with the Liberal government passing the harmonized sales tax into law.

The move, bitterly opposed by the Progressive Conservatives and New Democrats, saw the province join Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador in the national HST club.

The 13 per cent tax comes into effect July 1, 2010 - the same date British Columbia is set to also merge its provincial tax with the GST.

The HST is critical to help reposition Ontario as it comes out of a recession in which the province lost hundreds of thousands of jobs, Premier Dalton McGuinty said in an interview from Mumbai, India, where he is on a trade mission.

"I think people understand in their heart of hearts that our world has changed and the old world is not coming back," McGuinty told The Canadian Press.

"There are a number of things that we need to do to adjust to the new reality and secure a better future for our families, and one of those is to put in place a modern, competitive tax system."

The road to Wednesday's vote in the Ontario legislature, which the majority Liberals won handily, was a bumpy one.

For weeks the Progressive Conservatives tried to block the HST, asking for frequent votes to delay proceedings and repeatedly calling McGuinty a liar in the house. Two maverick Tory members even staged a 44-hour occupation of the legislature.

The NDP said cracks were appearing in the government ranks on the HST issue, noting nine Liberals ducked the vote, including two cabinet ministers, some of whom were seen later in the legislature for a group picture.

"The HST has made a whole bunch of Liberal MPPs real nervous," said NDP finance critic Michael Prue.

Opposition parties have labelled harmonization a massive tax grab because it will increase the cost of many items, such as gas and home heating fuel, that were previously exempt from the provincial levy.

The government line, that blending the GST with the eight per cent provincial sales tax will reduce costs for businesses, allowing them to lower prices for consumers and hire more staff, was repeated by Finance Minister Dwight Duncan before the vote.

"Doing nothing is not an option (and) the status quo is just absolutely the wrong thing," Duncan said during third reading debate.

"This package will create jobs."

While the government estimates the HST will help create almost 600,000 jobs in Ontario over the next decade, the Opposition laughed at that estimate.

"I think when Ontario families hear this notion that by increasing the sales tax they're somehow going to create jobs, they'll see that for the nonsense that it is," said Progressive Conservative Leader Tim Hudak.

Ontario is getting $4.3 billion over two years from Ottawa to move ahead with tax harmonization under a deal signed last March.

The opposition parties failed to convince the government to hold public hearings on the HST bill across the province, and accused the Liberals of being afraid to face a voter backlash against the new tax.

The Liberals used their majority "to ram through the HST bill as quickly as possible and with little debate as possible," said NDP Leader Andrea Horwath.

"We are disgusted with the way this government has behaved in terms of the harmonized sales tax."

The HST is going to kick people when they're already down because of the recession, added Horwath.

"This government decides to bring in tax reform that's going to make life a hell of a lot less affordable for people," she said.

"Shame on them."

The legislation also includes cuts to corporate and income taxes that take effect Jan. 1, and one-time rebates of up to $1,000 for some families to offset the impact of the HST, which take effect July 1.

The Tories said "it was a sad day for Ontario families."

"Dalton McGuinty has brought in the biggest sales tax grab in our history," said Hudak.

"It's going to cost more to put gas in your car, heat your home and for every day services from getting your hair done to taking your dog to the vet."

 
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