Ontario Premier Dalton McGuinty turned up the rhetoric to sell the provincial budget to taxpayers while visiting business leaders in Ottawa's Little Italy on Friday.

While the budget has been touted as 'business-friendly,' many consumers have expressed outrage at the decision to blend the provincial and federal sales tax starting in July 2010.

"There is no easy way forward. I mean if there was, someone would have pointed that out by now," McGuinty told reporters on Friday.

The move to harmonize the taxes means many items that were previously exempt from PST will become more expensive, including gas haircuts and heating oil.

However, the province will make the following exemptions:

  • Books
  • Diapers, children's clothing and footwear
  • Child booster seats
  • Feminine hygiene products
  • New homes under $350,000

McGuinty defended harmonizing the two taxes Friday, saying the move will make Ontario's tax system more efficient, in turn helping businesses that have been hit hard by the recession.

"We need to change our tax system. We need to catch up to 140 other countries. We need to catch up to four other provinces. We need to start giving our businesses the advantages they enjoy in those other countries and those other provinces," said McGuinty.

Business owners in the capital say they're happy with a single sales tax, a decision many have been lobbying for over the past several years.

They say harmonizing the two taxes will help curb $500 million in loss productivity spent doing the paperwork for both the GST and PST.

The province says it will hand out transition cheques to offset the new 13 per cent harmonized sales tax. Single residents will receive about $300 and families will get $1,000.

In addition, the government has committed bringing in some income tax cuts that will supposedly leave lower and middle-income Ontario families better off.

The provincial budget, which was delivered on Thursday, forecasts a $56.8-billion deficit over seven years.

With a report from CTV Ottawa's Kate Eggins