First Nations protesters rally against the HST at Queen's Park on Thursday afternoon. (Mike Crawley/CBC)

About 200 First Nations protesters clogged major Toronto streets temporarily Thursday, demanding retention of a point-of-sale exemption from the provincial portion of Ontario's proposed harmonized sales tax.

The protesters, who had gathered outside Queen's Park, spilled out onto University Avenue in the afternoon and marched south and then east on Dundas Street. They then marched north on Yonge Street before turning west on College Street and returning to Queen's Park.

As of 5:15 p.m. ET, the protest had ended.

Toronto police were escorting the march, which halted traffic on Yonge and College.

The protesters say the Liberal government did not consult natives enough on the plan to merge Ontario's eight per cent provincial sales tax with the five per cent federal goods and services tax.

"This is where we have to draw our line in the sand," said Grand Council Chief Patrick Madahbee of the Union of Ontario Indians, which represents 42 First Nations.

"Already action is being contemplated out in the communities ... and I think this could be an escalating issue right across the province and right across the country."

A processing jumble

The First Nations protesters call the harmonization a violation of their treaty rights.

Currently, native people qualify for a point-of-sale exemption from the provincial tax. But they fear that the harmonized sales tax will be administered in the same way the GST is.

Under current GST rules, goods and services purchased by status Indians on First Nations reserves are exempt, but items bought by status Indians off a reserve must be delivered to a reserve to qualify for a GST exemption.

Federal finance officials have confirmed to the CBC that the same rules will apply to the HST, following the tax exemption rules set out in the Indian Act.

Ontario Aboriginal Affairs Minister Brad Duguid said the province supports demands for a point-of-sale exemption for First Nations. But the issue falls under federal jurisdiction because Ottawa will administer the HST, he said, adding he has urged Ottawa to get behind the move.

The federal government, however, has not yet indicated whether it will support a point-of-sale exemption.

In the three provinces that already have a harmonized sales tax (New Brunswick, Nova Scotia and Newfoundland and Labrador), First Nations have received exemptions.

The protest came as the Ontario government kicked off the first of two days of public consultations on the HST, which will take effect next July.

A wide array of groups, including those representing seniors and condominium owners, spoke out Thursday against the tax harmonization.

Seniors, condo owners opposed

Paul Bailey, president of the Police Pensioners Association of Ontario, told a legislative committee at Queen's Park that seniors on fixed incomes will be hit disproportionately hard when the HST is applied to things like gasoline and home heating fuel, all currently exempt from PST,

Gerald Gibson, who represents about 4,000 condominium owners — many of them seniors — said the HST will drive up condo fees by six to seven per cent because it will apply to all services the condominium corporation pays for. The work of auditors, reserve fund specialists, groundskeepers and managers will all be taxable under the new system.

The Certified General Accountants of Ontario was the first organization to speak in favour of the single sales tax, which it said would help businesses by lowering input costs and stimulating the economy.

"A single sales tax will offer many advantages to Ontario businesses and consumers, ranging from simplifying tax compliance for businesses that will save an estimated $500 million annually in reduced administrative costs, to eliminating approximately $5 billion in embedded provincial sales tax that businesses absorb annually," said association CEO Doug Brooks.

After staging a legislature sit-in and other protests trying to force more public hearings on the tax earlier this week, Ontario's Progressive Conservatives complained again Thursday that there will be only two days of consultations and vowed to introduce a series of amendments.

The Tories and New Democrats had been demanding public hearings across Ontario so the government could face what they say is widespread opposition to the HST.

The government agreed to add Monday's half-day of hearings only after the NDP used a procedural move that would have had Thursday's committee hearing start at one minute after midnight.

With files from The Canadian Press