Imagine if you overpaid into your RRSP a few years back only to be notified by the Canada Customs and Revenue Agency (CCRA) that you now owe big-time taxes - let's say $10 million - on this overpayment. But don't worry Ontario taxpayers will pick up the tab for your mistake. If you're one of approximately 300 current or former MPPs, this is precisely what is happening.

This is the side issue - albeit a $10 million side issue - that has popped up right in the middle of the Ontario PC leadership campaign and it doesn't look good for former Finance Minister Ernie Eves who is leading the race to succeed outgoing PC leader and Premier, Mike Harris. In Mr. Eves defense, his officials have suggested that the timing of this "news" is suspect is probably the work of mischief-making Liberals who are trying to sully his image. Fair enough, there is likely some validity in this suspicion.

Nonetheless, it appears as though Ontario really messed up in 1996 in the way it wound down the gold-plated MPP pension plan. Of course, the concept of abolishing the plan was the right thing to do as was converting paid up amounts for MPPs in RRSP contributions. At issue is the manner in which this concept was executed.

The problem was (and is) that the Ontario government contributed too much into these RRSPs in direct contravention of overwhelming expert advice. Instead it relied on one outside opinion that said what they were doing was legal and acceptable under the Income Tax Act and relevant pension and RRSP legislation.

Some $54 million was withdrawn from the old MPP pension scheme and topped up with another $55 million from general revenues. This $109 million was in turn funneled into RRSP accounts for current and former MPPs or survivors.

The payouts into the RRSP scheme were quite impressive. Former Premier Bob Rae along with NDP colleagues Bud Wildman, Floyd Laughren and Dave Cooke received payments of $1 million or more. And current MPPs like Grit Sean Conway also made out very well. As for Ernie Eves and Mike Harris, their payments were $810,000 and $864,000 respectively.

In setting up this conversion, officials from the provincial Ministry of Finance, a major accounting firm, a prominent Toronto law firm, and Ottawa (including then DM of Finance and now Bank of Canada Governor, David Dodge) all warned Ontario against proceeding as it planned. But Ontario ignored this advice and counsel and marched ahead.

Now fast forward to 2002 and the 300 current and former MPPs have been asked to withdraw excessive contributions to their pension schemes, sometimes up to 50% and 60% of the original RRSP amount. But withdrawing this money counts as income which is subject to income tax. This is where the province (read: Taxpayers) will step in and pay out $10 million to cover the tax bills owing.

This boondoggle yields some fundamental questions. To start, it must be determined if Ontario actually received a 'ruling' from Ottawa. A ruling is a binding interpretation of tax implications (decided by CCRA and Justice) in advance of a financial transaction. If Ottawa gave a formal ruling, then Mr.Eves and crew did nothing wrong and the matter should be dropped.

However, if a formal ruling was not obtained, then other questions arise. Why wasn't a formal ruling sought Was Mr. Eves was in a conflict of interest in pushing this scheme through when he stood to personally benefit And is it fair that taxpayers absorb this entire $10 million hit or should former MPPs share in paying some of the taxes owing At the very least, taxpayers deserve some answers to these $10 million questions.