Ontario status Indians are to be exempt from the harmonized sales tax when they shop under a looming agreement with the federal and provincial governments.

With the 13 per cent HST coming into force on July 1, First Nations groups had expressed concern that their long-standing exemption from the provincial sales tax would not be maintained, violating their treaty rights.

The HST blends the 5 per cent federal GST with the 8 per cent PST. But federal Finance Minister Jim Flaherty is poised to agree to the Ontario government’s request that the PST portion of the levy not be charged to natives at points of sale.

“Ontario’s government has decided in principle to maintain the provincial exemption for status Indians. We respect tax decisions taken by provincial legislatures and assemblies,” an aide to Flaherty said Wednesday.

In Quebec City, Premier Dalton McGuinty said a deal is “pretty close” and that the federal and provincial governments have worked well together and with First Nations leadership.

“All we want to do is maintain an arrangement that has been in place for over 30 years under a number of different provincial governments of different political stripes, and I think we’re pretty close to landing what we need to land,” he said after a meeting with Quebec Premier Jean Charest.

“I’m told on principle an understanding has been reached,” said Nishnawbe Aski Nation (NAN) Grand Chief Stan Beardy in an interview from Thunder Bay. “Our people and technicians are working on the wording.”

Meetings with federal finance and provincial officials took place June 11, said Ontario Regional Chief Angus Toulouse. Those meetings continued Tuesday and Wednesday.

Ontario’s Liberal government says blending the GST and PST is necessary to make businesses more competitive and remove red tape. The HST will cause some daily items such as haircuts, gasoline and home heating fuel to increase in price, but 83 per cent of consumer items won’t be affected.

However, provincial point-of-sale exemption is a treaty right, said Beardy.

“We will do whatever we can to protect that right,” he told the Star last week from Sandy Lake, 600 km northwest of Thunder Bay. “If it means we are forced to take direct action, then that is what must happen. We have to send a message to Canada and Ontario that treaty rights we agreed to 100 years ago are legally binding.”

First Nations people living in northern communities struggle with poverty and face high unemployment rates — in some cases as high as 95 per cent.

Added to the high cost of living in the north, being forced to pay the HST would be crippling, said Beardy. NAN is a political territorial organization representing 49 First Nation communities.

McGuinty said the threat of action such as blockades before the G8 and G20 summits did not play a role in the timing of the deal.

“I think that’s reading too much into it,” he said, adding an agreement has been in the works since the HST was unveiled in 2009.

The province has been talking about an exemption for status Indians for a long time but the objections have been “coming on the part of the federal government” because of the complexity of the proposal, McGuinty said.

However, provincial NDP Leader Andrea Horwath said the timing of the agreement directly before the G8 and G20 summits is suspect.

Loading... Loading... Loading... Loading... Loading... Loading...

First Nations have been raising the question of the PST exemption since the day they found out about the HST, said Horwath.

“It is only because the G8 and G20 are imminent and there is a fear of embarrassment and disruption that finally the feds and the province, we think, are coming to the table.”

With files from Richard Brennan in Ottawa and Rob Ferguson in Quebec City

Read more about: