OTTAWA—Premier Dalton McGuinty says paying higher taxes is the price of living in Ontario.

“We have a more challenging and a more competitive world, and as a society, our generation has got to step it up,” he said on Friday.

Speaking to reporters in Ottawa, McGuinty blamed the $21.3-billion provincial deficit, among other factors, for the introduction of the controversial harmonized sales tax.

“I think voters want to me do what I believe is the right thing to do, and I think they know that sometimes doing the right thing is not easy,” he said after visiting a small sporting goods manufacturer in east-end Ottawa.

“We will do whatever it takes to secure a bright future for our kids and their kids,” McGuinty added.

McGuinty was recently forced to concede that the 13 per cent HST – which blends the 5 per cent federal goods and sales tax with the 8 per cent provincial sales tax – will hit Ontarians harder than first believed.

According to a study commissioned by the NDP, the blended levy will cost the average family an additional $792 annually.

A family with a household income between $50,000 and $60,000 would pay an additional $862 a year. For families with an income greater than $100,000, it’s a $1,732 hit.

“Why is that our grandparents and parents have always found a way to step it up and do something for the next generation but somehow we say we can’t adjust to those things,” McGuinty said. “I don’t buy that.”

At Queen’s Park, Progressive Conservative MPP Lisa MacLeod called the premier’s admission that the HST will hit pocketbooks “a cleansing moment of honesty for McGuinty.” Party leader Tim Hudak added that Ontario families have already paid enough taxes as it is.

Taking into account the impact of the HST on electricity, gasoline and home heating fuel costs, plus increases in auto insurance, university tuition and property assessments, the Conservatives calculate that Ontario families will be paying an extra $2,700 a year compared to 2007 levels.

“Enough is enough,” said Hudak. However, the Progressive Conservative leader would not commit to chopping the HST or say how he would cut costs for Ontario families if elected in 2011.

Liberal MPPs are nervous about the HST, given that the government will face an election a year from October, just as consumers will really start to feel the pinch.

The blended tax will increase the cost of 17 per cent of purchases, including gasoline, home energy, haircuts and taxi fares. Exempted from the HST are newspapers, books, coffee, fast-food meals under $4, diapers, children’s clothing and booster seats, and feminine hygiene products. Taxes on 83 per cent of products — including groceries — will not change.

McGuinty said that while it might be bitter medicine, the fact remains the province needs the extra money for education, health care and other provincial programs.

“It is not always an easy thing to do, but I think it is important that we do the right thing,” he said.

McGuinty said 140 of the countries that Canada competes with for business have a tax similar to the HST, which he says reduces input costs for businesses.

He added that the province’s tax reform package is designed to create 600,000 jobs in Ontario over the next decade.

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The premier noted that his government has moved to offset the HST slightly by reducing personal income taxes and planning rebate cheques of up to $1,000 per household for most low- and middle-income families.

“I haven’t met a single parent or grandparent who hasn’t said to me, ‘I’m prepared to do whatever it takes to make sure there are jobs for me today and for my kids tomorrow,’” McGuinty said.

With files from Rob Ferguson

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