QUEBEC — Prime Minister Stephen Harper will put an end to a decades-old dispute with Quebec Friday by handing over $2.2 billion in compensation on the HST.
Quebec harmonized its provincial sales tax with the federal GST in 1992 and has since pressed Ottawa to compensate it for doing so.
Until recently, the federal government had refused to write Quebec a cheque, arguing it hadn't fully harmonized its tax as Ontario and British Columbia did, because Quebec, as opposed to the federal government, handles the administration.
The federal government promised during the spring election campaign to strike a final agreement with Quebec by Sept. 15, but the deal will be signed by Harper and Quebec Premier Jean Charest on Friday.
"We have managed to settle this long-standing dispute," a source told Postmedia News. "This is a major announcement."
The two politicians are set to meet for more than an hour before making the formal announcement at 1 p.m. Friday at Quebec's national assembly.
The federal government declined to confirm the announcement Thursday but Transport Minister Denis Lebel noted the Conservatives will deliver on their promise.
"The prime minister always kept his word and it was in our election platform. So in due, time the prime minister will make the announcement and I've always believed we would do what we said we would do," Lebel said.
Every province that has harmonized its sales tax received lump sums for doing so: from $4.3 billion in Ontario to $364 million in New Brunswick.
However, those provinces and others handed control of their sales tax programs to the federal government.
Quebec has its own revenue agency that manages and collects both provincial income and sales tax. The settlement is expected to allow the province to maintain control of the federal sales tax as well as its own provincial sales tax.
The Bloc Quebecois, which pressed the issue in Ottawa for years and notably during the last federal election campaign, took some credit for the announcement.
"We've been waiting for this for 20 years. It's a victory for the Bloc Quebecois, considering how long we've been talking about this. It had been a long-standing battle," Bloc MP Andre Bellavance told reporters in Ottawa.
"We still don't understand why, though, Quebec had to wait so long for it. The money is due to us and we're happy it's finally happening," he added.
Official Opposition leader Nycole Turmel criticized the Tories Thursday for making a promise to settle the HST irritant during the election campaign.
"We'll see (Friday) what will happen. I hope for Quebec that they get it like they were promised to represent it. It is in our platform so we support this," the interim NDP leader said.
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