Natives in Ontario are getting their long-sought harmonized sales tax exemption two months late due to provincial foot-dragging, charges federal Finance Minister Jim Flaherty.

In a chiding letter Thursday to Ontario Finance Minister Dwight Duncan, Flaherty said Ottawa was happy to abide by the First Nations’ request for a continued point-of-sale tax break, but not till Sept. 1.

That’s two months after the July 1 blending of the 8 per cent provincial sales tax, which status Indians have not had to pay for more than 30 years, and the 5 per cent federal goods and service tax that they have paid upon purchase since 1991.

“Last year, I had communicated to you a firm deadline of June 30, 2009 for Ontario to inform the government of Canada of its list of desired point-of-sale rebates,” the federal treasurer wrote in a letter obtained by the Star.

Those exemptions from the 8 per cent provincial sales tax portion of the 13 per cent HST initially included books, feminine hygiene products, diapers, children’s clothing, and kids’ car seats.

Later, the province secured a similar deal for newspaper subscriptions and fast-food value meals and coffee under $4.

But sources say while Premier Dalton McGuinty and his ministers had been publicly urging the First Nations’ point-of-sale exemption, Queen’s Park did not get around to formally requesting it from Ottawa until about six weeks ago.

“Although Ontario did not respect this (2009) deadline to request a rebate for First Nations, the government of Canada has worked diligently to accommodate your decision and the needs for Ontario First Nations,” said Flaherty.

“Effective Sept. 1, 2010, at the time of sale, Ontario vendors would be allowed to rebate the provincial component of the HST for off-reserve purchases that are eligible for the provincial relief upon presentation of a valid certificate of Indian status card, effectively resulting in only the 5 per cent federal component of the HST being collected,” wrote Flaherty.

Ontario Revenue Minister John Wilkinson heralded the agreement, but denied the province is to blame for the delay.

Wilkinson said the extra two months is to enable Ottawa, which does not have point-of-sale exemptions for First Nations in other provinces that have harmonized sale taxes, to get up to speed.

“The challenge here on the point-of-sale exemption is that this is something that is new to them,” Wilkinson said in an interview.

“We have experience with this. We’ve had point-of-sale exemption for the past 30 years,” he said.

“I’m hoping that this could be a turning point in the relationship between our government, the federal government and First Nations.”

First Nations leaders were in meetings late Thursday on the agreement and reluctant to comment until everything was finalized.

However, officials in Ottawa and Queen’s Park scoffed at suggestions that First Nations musings about blockades during next week’s G8 and G20 summits led to the deal.

Insiders at both levels of government said it was driven by the July 1 deadline for the launch of the HST and nothing else.

Ontario Regional Chief Angus Toulouse said it was the federal government that caused the delay. The province was “standing shoulder to shoulder” with First Nations but needed the okay from the federal government to finalize the exemption, he said.

Ontario will refund First Nations people the 8 per cent tax they must pay in July and August, Toulouse added.