Finance Minister Jim Flaherty is hoping to redirect Ontario natives to Queens Park when they arrive on his doorstep Wednesday in Ottawa.
The Globe and Mail has obtained a letter from Mr. Flaherty to Ontario Finance Minister Dwight Duncan in which he declines proposals to exempt the province's natives from the harmonized sales tax.
Ontario natives are holding a rally on Parliament Hill to protest against the July 1 implementation of the HST. For years, the Ontario government has allowed status Indians to receive provincial sales tax exemptions anywhere in the province provided they show their federally-issued Indian status card.
As for the federal goods and services tax, natives in Ontario and everywhere else only receive exemptions when goods are delivered to a reserve or purchased on a reserve.
Ottawa insists the federal GST rules will apply to all of the HST when it takes effect. That means Ontario natives will have to pay federal and provincial sales taxes for off-reserve purchases, which they criticize as a tax hike on the poor in the midst of a recession.
In his letter, Mr. Flaherty said Ottawa is open to negotiating a special arrangement for Ontario natives, which one official said could involve end-of-year tax rebates. Ontario native leaders have previously dismissed such a proposal.
"Ontario may wish to explore other ways to meet the interests of Ontario First Nations outside of the HST framework," writes Mr. Flaherty. "Federal officials continue to be willing to work with your officials to explore ways for Ontario to accomplish this."