TORONTO - Ontario's Liberal government said Thursday that the federal Conservatives are refusing to allow First Nations in the province to retain their point of sale exemption from the provincial portion of the 13 per cent harmonized sales tax that kicks in next July.

Ontario has asked federal Finance Minister Jim Flaherty to make sure First Nations aren't hit with an extra eight per cent tax on everything they buy, forcing them to apply for a rebate on the provincial portion of the HST, said provincial Finance Minister Dwight Duncan.

"The way the GST is collected, someone who lives on a reserve and buys off reserve must go back and show that it was consumed on the reserve and then apply for the rebate," said Duncan.

"We've asked the federal government to consider the administration of the (harmonized) tax the way we have administered the PST. The federal government has said no up until now."

Ontario's Aboriginal Affairs Minister, Brad Duguid, said he hadn't had any more luck convincing his federal counterpart, Chuck Strahl, to maintain the PST exemption at the cash register for First Nations.

"We believe the Ontario system works best," said Duguid.

"It's the fairest, and we'll continue to advocate for First Nations with respect to that."

However, the Union of Ontario Indians, which represents 42 First Nations, said it's seen too many native issues treated as a hot potato by different levels of government.

"This is a classic example of the federal and provincial governments playing ping-pong with our issues," said Chief Patrick Mahdabee.

"The province has already identified other types of exemptions and should have included us, and on the other side of the coin, the federal government refuses to meet with us on this matter."

Having to pay the HST will be an "extra burden" on First Nations in remote communities, where basic staples like milk and bread sell for two or three times the retail prices in southern Ontario, said Mahdabee.

"It's a tax grab," he said. "We see this as an attempt by the federal government to subject us to taxation and will not agree with that in any way shape or form."

The New Democrats said Ontario's Liberal government failed to even talk with First Nations before it signed a deal with the federal Conservative government to harmonize the eight per cent PST with the five per cent goods and services tax.

"Without consulting, the McGuinty Liberals have surrendered decision-making powers to the federal government, a move that could end the point-of-sale exemption for off-reserve purchases," complained NDP Leader Andrea Horwath.

Earlier Thursday, the tone of the debate over the harmonized sales tax turned nasty, with several Tories getting thrown out of the legislature for calling Premier Dalton McGuinty a liar.

Sarnia Progressive Conservative Bob Bailey was the first to be ejected for using unparliamentary language when he said McGuinty was a "cowardly liar" for blocking public hearings on the HST bill.

"That's the way I feel," Bailey said later. "He's not taking the opportunity to go out and do what he knows is right."

Two more Opposition members, Ted Chudleigh and Peter Shurman, were also thrown out by Speaker Steve Peters Thursday when they too called McGuinty a liar and refused to retract their statements.

The Conservatives said they will use every delaying tactic they can to force public hearings on HST, and continually disrupted proceedings Thursday by banging their desks, repeatedly interrupting the Speaker and shouting down government ministers.

McGuinty, who was not in the legislature Thursday, has said that he won't hold public hearings on the HST, but voters can pass judgment on his government's decision to harmonize the sales taxes in the 2011 Ontario election.

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