Ont. passes bill for 13 per cent HST starting July 1

Ontario Finance Minister Dwight Duncan stands during question period in Queen's Park in Toronto, Wednesday, Dec. 9, 2009.

The Ontario legislature passed the HST bill Wednesday in its third and final reading by a vote of 56 to 29 after weeks of attempted stalling by the opposition parties.

"It's a historic day for Ontario. It's about creating jobs, it's about responding to the loss of jobs in the auto sector, in the forestry sector ...," Finance Minister Dwight Duncan said Wednesday in defence of the policy.

Accompanying income tax cuts will begin on Jan. 1.

The legislation will be applied beginning July 1, 2010. It blends the province's 8 per cent provincial sales tax with the 5 per cent goods and services tax.

Once the legislation is proclaimed, it becomes law. But it will do so amid howls of protest from members of the opposition parties, who are accusing the majority Liberal government of ramming the legislation through as quickly as possible, with little debate.

Finance Minister Dwight Duncan maintains the single tax will help create 600,000 jobs over the next decade. He said the HST will effectively lower costs for businesses, allowing them to lower prices and hire more staff.

"Doing nothing is not an option (and) the status quo is just absolutely the wrong thing," said Duncan in the third reading debate. "This package will create jobs."

The opposition Progressive Conservatives, however, call the HST a tax grab. They say it will apply to many items including gasoline, home heating fuel and cable TV bills, that are exempt from the PST.

Premier Dalton McGuinty told the Canadian Press in an interview from Mumbai, India that he's convinced the HST will help Ontario recover from a deep recession.

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

"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."

Because HST only applies to the value added by a business, so there's no tax on a tax. It is a tax system used by at least 130 countries. Len Crespino of the Ontario Chamber of Commerce said Ontario is one of the few jurisdictions in the world to not have a value-added tax system.

"We believe this will lead to a far degree of foreign direct investment," he said.

However, consumers will notice the hit to the pocketbook until prices adjust downward. The HST will apply to services such as hair cuts, funerals and real estate sales.

On Jan. 1, however, the province will cut income taxes. There will also be transitional payments to individuals and families -- something made possible through a $4.3-billion deal with the federal Conservative government.

Progressive Conservative Leader Tim Hudak said: "Ontario families are tired of paying more to get less. They are tired of your greedy tax grab adding more to their burden. You're not going to get away with this. Ontario families are seeing through it. They know they cannot afford this government and they want to see change."

The provincial Tories have not definitively said they will reverse the tax if they ever form government.

"By the time the election comes, I think the people will not forget this. This is not an easy one to forget," NDP Leader Andrea Horwath told reporters.

The government will be making payments totalling $1,000 to families and individuals making less than $80,000 per year. Those payouts will end in July 2011, a few months before the next provincial election.

British Columbia will also apply a harmonized sales tax on July 1. The federal government voted late Wednesday to pass the enabling legislation for B.C. and Ontario. The vote was 253-37.

Provinces that already apply the HST include Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador.

With a report from CTV Toronto's Paul Bliss and files from The Canadian Press