09/12/2011 06:02 EDT | Updated 11/12/2011 05:12 EST

Industry Minister Christian Paradis says feds, Quebec, close to deal on HST

MONTREAL - The federal government says Quebec will be able to keep collecting its own sales tax as part of a harmonization arrangement, expected to be worth about $2.2 billion.

Christian Paradis, the government's Quebec lieutenant and industry minister, says there are a few technical details to be worked out before the conclusion of a compensation deal.

A potential sticking point has been whether Quebec could be compensated for harmonizing its provincial sales tax with the federal GST, yet still collect the tax itself.

"There were irritants around the question of whether Quebec could manage the tax. These elements have been nearly settled," Paradis said Monday.

"It's clear that (the harmonized tax) will be managed by Quebec."

Paradis said there are "more technical" issues that remain to be resolved.

One contentious question has involved the list of items to be taxed; for instance, products like baby cribs and books are subject to the federal GST but not the provincial sales tax.

Federal Finance Minister Jim Flaherty said last week he didn't want to be held to a Sept. 15 deadline for a deal because there are still differences between the two governments.

The deadline was set by the Conservatives in the last federal election campaign.

Quebec sought harmonization compensation from the federal government after it reached similar deals with Ontario and British Columbia.

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