Liberal Leader Michael Ignatieff said on Tuesday that his party will support a Conservative bill that would allow provinces to harmonize the provincial sales tax and federal GST on products and services.
"Our party for 15 years has supported sales tax harmonization. This is a request from the provinces because they believe it will improve the competitiveness of their economy and create jobs," Ignatieff told reporters.
"We will support this legislation in Parliament."
Ignatieff added that it would not be a free vote.
The Liberals had been quiet on whether they would back the proposed legislation, which has put the party in the position of either supporting a measure unpopular with consumers or opposing the wishes of the B.C. and Ontario governments.
Both provinces have moved ahead with plans to merge the taxes.
While the NDP opposes the HST bill, the Bloc Québécois has said it would support the proposed legislation, which is not being put to a confidence vote.
Ignatieff had previously said that if the Liberals formed a government, they would not cancel HST agreements signed with the provinces. But it had been unclear whether they would support this proposed federal bill.
The HST would raise the price on some consumer goods that had previously been exempt from sales tax. The National Citizens Coalition estimates the HST will cost the average taxpayer an additional $800 to $1,000 annually.
But the Canadian Federation of Independent Business says harmonization will save business $100 million a year in reduced red tape.