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Combination photo shows Prime Minister Stephen Harper, left, and Liberal Leader Michael Ignatieff.

Adrian Wyld

The federal Conservative government will introduce legislation next week on which Ontario and British Columbia's plans to harmonize their sales taxes will stand or fall, delivering a powerfully problematic ultimatum to Liberal Leader Michael Ignatieff.

"Parliament's decision on the framework legislation will be certain and final," states a briefing memo that was obtained by The Globe and Mail. "This legislation will have the support of the Official Opposition or it will not. If it does, we expect the bill to win approval before the Christmas recess.

"If the framework legislation is rejected before Christmas, we will not revisit the issue. Not next year. Not after the next election."

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The Conservatives are forcing the Liberals to make a choice: support the framework legislation even though voters in two pivotal provinces dislike the harmonized sales tax, or defeat it and incur the wrath of two powerful Liberal premiers and their political machines.

Liberal governments in Ontario and British Columbia have proposed harmonizing their sales taxes with the federal goods and services tax to create a single levy, a measure that is supported by business but is deeply unpopular with consumers in both provinces.

The briefing document states that the proposed "technical legislative change" will end uncertainty about the ability of provinces to proceed with an HST if they choose. But if the bill fails in Parliament, it would make it impossible for the federal government to enable the blending of the GST with the provincial sales taxes in Ontario and B.C.

Mr. Ignatieff has dubbed the HST, which introduces or increases taxes on some items that are currently exempt, the "Harper Sales Tax." But he has also promised not to repeal the taxes if he becomes prime minister.

The NDP and Bloc Quebecois already oppose the tax, and will vote against it in the minority Parliament. If the Liberals joined in opposing the bill, it would die, and with it any hopes of an HST in Ontario or B.C. for many years to come.

"This is not a complicated issue," states the briefing document. "Either Parliament supports the right of provinces to choose a harmonized value-added tax or it does not."

If the federal Liberals vote against the bill and kill the HST, Mr. Ignatieff may earn the gratitude of many voters in the two provinces whose swing ridings will almost certainly determine the outcome of the next federal election.

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But defeating the bill would earn the enmity of Dalton McGuinty of Ontario and Gordon Campbell of British Columbia. Both Liberal premiers have expended much political capital trying to push through HST legislation, which they say would boost their economies by reducing costs for businesses.

Although bills that involve federal funds are generally considered matters of confidence, "this legislative change does not affect federal revenue or spending and is therefore not a confidence measure," the document states, which means its defeat would not bring down the government.

That declaration makes it impossible for Mr. Ignatieff to say he will allow the legislation to go through to prevent an election that the public does not want.

New Brunswick, Nova Scotia and Newfoundland and Labrador already have harmonized sales taxes. Alberta has no sales tax.

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About the Author

John Ibbitson started at The Globe in 1999 and has been Queen's Park columnist and Ottawa political affairs correspondent.Most recently, he was a correspondent and columnist in Washington, where he wrote Open and Shut: Why America has Barack Obama and Canada has Stephen Harper. He returned to Ottawa as bureau chief in 2009. More

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