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Much has been made of the improved relationship between Stephen Harper and Dalton McGuinty. Starting tomorrow, we'll find out just how tight they really are.

Assuming the Ontario government moves forward with a harmonized sales tax, the single biggest factor in its ability to sell it to the public will be which goods are exempted from it. And that decision is almost entirely in Ottawa's hands.

As I mentioned a couple of weeks ago, a tax reform that reduces the burden for big business while increasing it for the poor is an extremely generous gift with which to welcome Andrea Horwath to the NDP leadership. Even the provincial Tories seem to be sorely tempted to pile on, despite the fact that a Conservative federal government - and in particular the finance minister who happens to be married to one of their leadership contenders - has been actively pushing this file for years.

Even if the Tories don't lead the attack, harmonization could still prove extremely damaging for McGuinty's government. If the end of a provincial sales tax exemption means it's suddenly 8 per cent more expensive to buy stuff like children's clothes, diapers, books and heating oil - as unemployment in the province is swelling, no less - the provincial Liberals will be widely cast as the more heartless government in the country. If the opposition doesn't do it, much of the media will do it for them.

The way out of this, of course, would be for Ottawa to agree to exempt at least a handful of the most necessary items from the new tax - actually lowering the cost on those items by 5 per cent, since the GST would cease being applied.

That's an initiative you'd think a government with a great fondness for tax cuts would be all in favour of, and it would help ensure the reform Jim Flaherty has been actively pushing for years wouldn't get tossed out the window in the face of a huge public outcry. But that assumes a couple of things.

First, the federal government would have to be able to afford to give up that revenue - something that's far from certain, considering that stimulus initiatives combined with diminished revenues (in part because the GST has already been cut 2 per cent) already have it running a huge deficit.

Second, Harper's Conservatives would have to be willing to do something that would significantly aid the Liberals' re-election prospects in 2011. For a federal government not exactly known for setting aside partisan concerns, that's a lot to ask. There remain strong ties between the federal and provincial Conservatives; Flaherty, for one, has to be deeply conflicted about all this. 

I suspect negotiations will proceed well past tomorrow's anticipated announcement. The narrative may even involve the Liberals scoring a victory weeks down the road, by getting the feds to ostensibly cave in on a pile of exemptions. But if McGuinty is hung out to dry on this, we'll know that Harper's Conservatives were never as interested in friendship as photo-ops.