By refusing to join the growing movement to harmonize provincial sales taxes with the federal goods and services tax, the government of Canada's largest province is hurting its own businesses, depleting its own revenues and helping to keep in place an unfair and irrational tax regime.

Of course, if the Grits are having trouble getting provinces like Ontario on board, they have only themselves to blame. In opposition, the party had a grand time surfing public fury over the tax, content to exploit the many popular misconceptions about it - misconceptions that persist to this day, thanks to the laziness of the media, for whom "the hated GST" has become a single word. It is hardly surprising, then, to find provincial governments reluctant to touch the tar baby.

But to see the Conservatives in Ontario still playing the same game, almost a decade after the tax first entered public discussion, is beyond endurance. The premier, who should know better, went so far the other day as to declare that hell would freeze over before the province would bring its sales tax in line with the GST.

It cannot be that the government actually believes the existing provincial sales tax to be superior to a GST-style value-added tax. Unlike the GST, the PST applies only to goods, and only some goods at that, arbitrarily benefiting some industries and penalizing others. Unlike the GST, the PST applies only to retail sales, rather than being levied at each stage of the production chain.

This preference again distorts consumer and investment decisions; or where businesses do pay tax on their purchases, leads to a "cascading" or compounding of the tax at each successive stage, since unlike the GST, the PST has no system of input tax credits. And while the GST came equipped with a generous tax credit for poor families that actually leaves them better off than before, no such claim can be advanced for the PST.

Why, then, other than fear of the public's wrath and delight in the Liberals' discomfort, do the Harris Conservatives resist replacing the PST with the obviously superior GST? Why, particularly, when the existence of two different sales taxes, each with its own separate tax base confronts business and the public with four different tax regimes: goods that bear both taxes; goods (and services) on which GST applies but not PST; goods where PST applies but not GST; and goods and services that are free of either tax.

The government has expressed two related concerns, one half-valid, the other groundless. On the one hand, it frets that extending the PST to cover the same broad range of goods and services as the GST would amount to a $3-billion tax increase on Ontarians. That's true, as far as it goes. But it could easily be offset simply by lowering the tax rate a point or two. Indeed, if the GST itself were applied to a broader base - notably, to include groceries - the two combined might charge just 10 to 12 per cent, instead of the current 15 per cent, with no loss in revenue.

Even if it did raise all that extra money, it would hardly leave Ontario's taxpayers in a worse position over all - not when the government is proposing to cut income taxes by $5-billion. But in fact there would be no net tax increase because the same $3-billion would be refunded via the new input tax credits to businesses that now pay provincial sales tax.

This makes nonsense of the government's other professed concern, that converting the provincial sales tax to a value-added tax would somehow double the tax whammy on consumers. Allegedly, since business would now be relieved of paying the sales tax on its inputs, the burden would instead be borne by consumers.

This is exactly the sort of nonsense the Liberals tried to bamboozle people with over the GST. The average consumer pays that sales tax now, just as surely as they paid the old federal sales tax (the one the GST replaced), which supposedly applied only to manufacturers. Business may have paid the tax in theory, but you can be sure they they passed it on to consumers.

In fact, by crediting business for the tax that they pay, a harmonized provincial sales tax would be more likely to lower prices on those goods where this cascading effect was significant, as businesses passed on the savings. That's exactly what happened when the old federal sales tax was replaced. Perhaps now the Liberals will start to point that out.