TORONTO - Tax collectors raking in a hefty severance package without missing a day of work will also get a 3.4% salary increase as they move from collecting provincial sales tax to the new Harmonized Sales Tax, ministry of revenue officials confirmed Thursday.

Virtually all -- 98% -- of the 1,250 Ontario employees moving to the federal Canada Revenue Agency as of July 1 will get the raise because the CRA works a longer work week, revenue ministry spokesman Leslie O'Leary said.

The remaining 2% will actually see a slight decrease in wages as their salaries are above the CRA maximum, O'Leary said.

The ministry of revenue employees are now responsible for collecting the provincial retail sales tax, which is being merged with the federal GST as of July 1.

The change means no more work for the PST collectors but plenty more for federal tax collectors, who will then remit Ontario's share of the 13% HST back to the province.

The deal to transfer the jobs from Ontario's payroll to Ottawa's helps the province meet its target of a 5% workforce reduction and was a key part of the overall HST deal, which includes $4.3 billion in federal money.

But it wasn't known that the workers, whose salaries range from $38,000 to $91,000, will all get up to six-months severance until Sun columnist Christina Blizzard revealed the deal Thursday.

"Let's get this straight: The HST tax-grab means tax collectors will be moved from the province to the federal government, but they are still being paid and given a hefty severance package," Tory MPP Ted Arnott said. "Could you explain to my constituents ... many of whom are working two part-time jobs to make ends meet, many of whom dream of making $45,000 a year, but aren't, why tax collectors are being handed that much when they aren't even missing a single day of work?

"They're being paid up to $45,000 to change their business cards."

Finance Minister Dwight Duncan had a ready answer.

"The Conservative government introduced that clause into the collective agreement," Duncan said.

"It's an interesting position that he (Arnott) takes today, having had a Conservative government put that clause in the collective agreement and now saying that we shouldn't honour it."

Premier Dalton McGuinty also defended the arrangement, saying the government can't arbitrarily renege on negotiated deals when they become inconvenient.

"Where does that take you?" McGuinty said. "There's an important part of our brand as a province, as a government when we do business with each other and we do business with the world, is that when we give you our word, our word is our word."

The province estimates it will pay out $25 million in severance -- an average of $20,000 per staffer.