There only are two signatures on this seminal agreement. The first one is Flaherty's

March 9, 2009

Memorandum of Agreement Concerning a Canada-Ontario Comprehensive Integrated Tax Co-ordination Agreement (HST)

BETWEEN:

The Government of Canada (referred to as "Canada"), as represented by the Minister of Finance of Canada

AND:

The Government of Ontario (referred to as "Ontario"), as represented by the Minister of Finance of Ontario;
Preamble

This memorandum of Agreement ("MOA") reflects the strong commitment by Canada and Ontario to work collaboratively to build a stronger economic foundation.

Pursuant to this MOA, both parties commit to using their best efforts to negotiate a new Canada-Ontario Comprehensive Integrated Tax Co-ordination Agreement (hereafter referred to as the "Canada-Ontario CITCA"), together with any necessary related agreements, whereby the Canada Revenue Agency ("CRA")and the Canada Border Services Agency ("CBSA") will administer an Ontario Value-Added Tax ("OVAT").

This MOA forms the framework for concluding the Canada-Ontario CITCA.
Canada-Ontario Comprehensive Integrated Tax Co-ordination Agreement

Canada and Ontario agree to make their best efforts to fulfill the undertakings set out in this MOA in order that all policy and administrative details are finalized, including any necessary legislative processes and the signing of appropriate agreements, before March 31, 2010, except where otherwise specified in this MOA.

Canada undertakes to seek the approval of the Governor in Council to enter into an agreement under Part III.1 of the Federal-Provincial Fiscal Arrangements Act consistent with the terms of this MOA. The parties understand that this MOA does not constitute an agreement pursuant to subsection 8.3(1) of the Federal-Provincial Fiscal Arrangements Act.

Ontario undertakes to seek authority to enter into the Canada-Ontario CITCA.

Canada and Ontario will use their best efforts to conclude the Canada-Ontario CITCA within six months of having signed this MOA.
Implementation Date

Subject to both Parties having signed the Canada-Ontario CITCA, and subject to legislative approval, the Parties will work toward the imposition of the proposed OVAT by the CRA/CBSA on July 1, 2010. Subject to these approvals, the CRA/CBSA will have the necessary systems in place to effectively implement the OVAT on July 1, 2010.
Federal Transitional Assistance to Ontario

To help offset the transition costs associated with the implementation of the OVAT and the winding down of the retail sales tax administration in Ontario and because moving to an OVAT would support economic growth and job creation, Canada will make two transfer payments totalling $4,300 million to Ontario. The schedule of transfer payments will be as follows: $3,000 million upon the date of imposition of the OVAT and $1,300 million one year following the date of imposition of the OVAT provided the tax continues to be in place one year after the date of imposition of the OVAT.

Ontario agrees to remain a party to the Canada-Ontario CITCA for a period of at least five years following imposition.
Ontario Value-Added Tax

An 8% OVAT would be implemented under the federal Excise Tax Act. Ontario will propose legislation to give effect to the Canada-Ontario CITCA and any other provincially administered measures appropriate to the transition to the OVAT.

The OVAT would have the same tax base as the Goods and Services Tax (GST), subject to the exceptions described below.
Provincial Tax Policy Flexibility

The Canada-Ontario CITCA will confirm Ontario's flexibility, subject to reasonable notice provisions, to:

* increase or decrease the OVAT rate after two years from the date of OVAT implementation;
* designate a limited number of OVAT point-of-sale rebates, not exceeding 5%, in aggregate, of the estimated GST base for Ontario subject to data availability and definitions used in the Canadian System of National Accounts or other mutually agreed upon data sources, definitions and methodologies. For greater certainty, point-of-sale rebates that Canada agrees to administer for Ontario will include children's clothing, feminine hygiene products and books;
* temporarily deny for a period of up to five years a portion, up to 100%, of allowable business input tax credits ("ITCs") based on a select list of items to be determined by Ontario (not to apply beyond the items subject to the current ITCs denials under the Quebec Sales Tax). Following this period, full ITCs will be phased-in, in equal annual proportions, over a period of up to three years. Ontario would advance the timeline for the phase-in of full ITCs should fiscal circumstances allow; and
* set OVAT rebate rates and thresholds for Municipalities, Universities, Schools, Colleges and Hospitals (MUSH),Charities, qualifying NPOs and New Housing, subject to matching other federal GST administrative and structural parameters.

Canada agrees to introduce legislation to enable the tax policy flexibility noted herein.
Common Tax Base

Except as provided in this MOA under the heading Provincial Tax Policy Flexibility, Ontario will enter into the Canada-Ontario CITCA and will be bound by tax base changes made by Canada with respect to the GST. However, where Canada proposes a tax base change that would result in a reduction of more than one percent of OVAT revenues (net of provincial rebates provided for under this MOA, and ITCs), Canada may implement the change only if the Minister of Finance of Ontario provides written agreement to the change prior to implementation. If Canada implements the tax base change without consulting Ontario, or proceeds without Ontario's written agreement, Canada agrees to fully compensate Ontario for the revenue reduction for every year that the change remains in place and the Canada-Ontario CITCA remains in force.

Canada and Ontario will develop reasonable notice provisions in the Canada-Ontario CITCA.
Collection and Administration

The OVAT, including all eligible rebates and temporarily restricted ITCs provided for in this MOA under the heading Provincial Tax Policy Flexibility, will be collected and administered, at mutually agreed upon service and compliance levels, by the CRA/CBSA at no charge to Ontario. In addition, Canada will be solely responsible for all CRA/CBSA startup and ongoing costs, including their development and systems costs.

For greater clarity, these costs will not reduce or be offset against the $4,300 million in total transfer payments provided for in this MOA under the heading Federal Transitional Assistance to Ontario.
Payment of Revenues Collected

Canada and Ontario agree that revenues payable to Ontario will be based on the revenue allocation framework as set out under the Canada-Ontario CITCA, subject to the following:

* Canada agrees to pay Ontario its revenue entitlements on a daily basis. For greater clarity, the allocation for a tax entitlement year will be paid to Ontario in estimated daily amounts determined using the revenue allocation framework beginning July 1, 2010. The payments will be based on the estimate for the tax entitlement year, and will include adjustments to these amounts relating to scheduled revisions and reconciliations as provided for under the revenue allocation framework.

The revenue allocation framework to be included in the Canada-Ontario CITCA will be based on the framework in the CITCA between Canada and the HST provinces.
Exchange of Information and Other Agreements

There will be full co-operation between Canada and Ontario with respect to the exchange of information relating to the OVAT. The specific terms on information exchange and mutual assistance will be provided for in agreements to be entered into between Canada and Ontario (e.g., the CRA and Ontario and the CBSA and Ontario). Such agreements will ensure the timely provision of available OVAT specific data and other OVAT-related information to Ontario, as maybe disclosed pursuant to the appropriate laws and regulations.

Canada and Ontario will work to establish mechanism(s)/agreement(s) to provide for the management of issues related to client services, compliance and enforcement of the OVAT by the CRA/CBSA.

Best efforts will be made to conclude these agreements in a timeframe that is consistent with, and no later than, the target date for the conclusion of the Canada-Ontario CITCA noted earlier.
Human Resources

Canada and Ontario acknowledge that they each must consider relevant legislation and policies, and have collective agreement obligations with their respective bargaining agents. Within this context, the Parties agree to negotiate the best possible arrangements, to be contained within a Human Resources Agreement, for employment at CRA/CBSA within Ontario, of Ontario Public Service employees affected by this MOA.
CRA Administration of OVAT in Ontario

Given the significant presence of CRA/CBSA activity and operations in Ontario, and the previous clause pertaining to Human Resources, Canada will maximize the amount of activities and operations carried on in Ontario for OVAT.

Where it can be demonstrated, with respect to specific OVAT activities and operations, that the effective administration of OVAT would be jeopardized if the activities and operations are performed in Ontario, Canada will use best efforts to maximize employment opportunities in Ontario for a corresponding number of Ontario employees affected by this initiative, within departments or agencies of the federal government.
Audit

The Ontario Minister of Finance may designate a person to examine such books and records, excluding information which is protected by law, as maybe relevant in order to permit such person to report in respect of the payments made to Ontario under the Canada-Ontario CITCA.
Appointment of Panel

Canada and Ontario agree to jointly appoint a Panel or Individual, within 6 months following the implementation of the OVAT, to review and make recommendations on possible improvements to the:

* administrative and policy information available on the OVAT;
* revenue allocation framework, such as replacement by a system that would provide the distribution of revenue to Ontario, and Harmonized Sales Tax provinces, based on actual sales of goods and services in such provinces; and
* governance and organizational structures of the various committees under the Canada-Ontario CITCA.

The Panel or Individual will report back to the parties within one year of being appointed.

Canada and Ontario agree to consider revising the Canada-Ontario CITCA as appropriate to reflect the recommendations of the Panel or Individual. Canada will consult with the existing Harmonized Sales Tax provinces.
Ontario Retail Sales Tax

Ontario will be responsible for winding down its retail sales tax to the extent that it is to be replaced by the OVAT.

CRA/CBSA and Ontario will have the option of agreeing on the CRA/CBSA providing client services, collections, audit, rulings, objections and appeal activities in respect of the retail sales tax on an incremental fee for service basis over the transition period.
Constitutional Jurisdiction Not Waived

Neither Canada nor Ontario shall be deemed to have surrendered or abandoned any of its powers, rights, privileges or authorities under the Constitution Acts, 1867-1982, and any amendments thereto, or otherwise, or to have impaired any such powers, rights, privileges, or authorities.
Confidentiality

Pending a public announcement by Ontario that it is introducing an OVAT, Canada commits to taking all steps to embargo the existence of this MOA and to not disclose in any way federal-provincial discussions relating to the development, negotiation and execution of this MOA or to an OVAT. The Parties agree not to disclose this MOA unless mutually agreed to in writing or required by law.

THIS MEMORANDUM OF AGREEMENT ENTERED INTO ON:
March 9, 2009

FOR CANADA
The Honourable James M. Flaherty
Minister of Finance March 10, 2009

FOR ONTARIO
The Honourable Dwight Duncan
Minister of Finance