Engagement

Public consultations: Ontario Gas Card Program Modernization: Discussion Paper

Preamble

The Ontario government is exploring options to modernize the Ontario Gas Card Program to improve service for First Nation individuals, gasoline retailers and industry stakeholders; and overall program efficiency and integrity.

Ontario respects First Nation individuals’ rights to purchase tax-exempt gasoline, and as such, is seeking a meaningful dialogue with First Nation individuals, on-reserve retailers and communities on approaches that would help to make purchasing tax exempt gasoline faster, easier and more efficient.

Ontario legislation applies gasoline tax at a rate of 14.7 cents per litre of gasoline. Qualified First Nation bands and individuals are exempt from paying this tax if they buy gasoline on-reserve for their exclusive use from an authorized on-reserve gasoline retailer. Only those on-reserve gasoline retailers who are authorized by the Ministry of Finance may sell tax-exempt gasoline to qualified First Nation bands and individuals.

The Ministry of Finance is committed to ensuring that qualified First Nation bands and individuals can purchase tax-exempt gasoline according to the provisions of the Gasoline Tax Act (GTA) The ministry must also ensure that compliance measures are in place, so that an exemption from payment of Ontario's gasoline tax is granted only to persons who are eligible. Upon application, the ministry provides each eligible First Nation band or individual with a "Certificate of Exemption," commonly referred to as a "gas card." At the time of the sale, the purchaser will present his or her gas card to the retailer.

First Nation communities have expressed concerns with the Ontario Gas Card Program such as:

  • The administrative burden of filing manual claims and long processing times for these refunds;
  • The perception that requiring First Nation individuals to use the Federal Certificate of Indian Status Card to apply for an Ontario Gas Card, and then to use the Ontario Gas Card to purchase gasoline exempt from tax is onerous and unfair; and
  • The ministry’s refusal of on-reserve gasoline retailers’ refund claims due to invalid gas cards.

Through the recent Ontario Budget and the 2015 Fall Economic Outlook and Fiscal Review, the Province committed to engaging with First Nations to seek advice on modernizing the Ontario Gas Card Program.

Context

On August 24, 2015 the Chiefs of Ontario and the Government of Ontario signed a historic Political Accord that will guide the relationship between First Nations and the province. The Accord affirms the inherent right to self-government, commits parties to work together on issues of mutual interest and sets a path for further reconciliation between First Nations and the people of Ontario.

The government is committed to developing a new relationship and continuing ongoing dialogue with First Nation communities and leaders.

Objectives

The Ministry of Finance’s main objective in engaging First Nation communities on the modernization of the Ontario Gas Card Program is to identify an approach that will minimize the burden to both individuals and businesses, while enhancing the program’s integrity.

Key components under consideration to meet this objective include:

  • Reviewing the requirements for First Nation individuals to obtain a gas card; and
  • Identifying the technology options to process refunds.

Engaging First Nation communities and industry stakeholders representing gasoline wholesalers and collectors, is essential to ensure any solution considered takes into account the impact on individuals and businesses when purchasing gasoline on reserve. This discussion paper is a first step toward initiating ongoing dialogue on current program challenges, opportunities and solutions.

By addressing inefficiencies with the Ontario Gas Card Program in collaboration with First Nation communities, Ontario aims to:

  • Respect and support First Nations’ rights to purchase tax-exempt gasoline;
  • Provide a more efficient process for First Nation individuals to purchase tax-exempt gasoline; and
  • Provide a more efficient process for First Nation gasoline retailers to obtain tax refunds.

Overview

In Ontario, there is a tax of 14.7 cents per litre on gasoline. First Nation individuals and bands do not have to pay this tax when they buy gasoline: for their own use, and from an authorized gasoline retailer on a reserve. Ontario’s Gas Tax Act applies a tax on consumers of gasoline products in Ontario, with the exception of First Nation individuals and bands (as defined in the federal Indian Act) who acquire gasoline, aviation fuel or propane on reserve for their exclusive use.

The Province requires First Nation individuals to present a valid gas card issued by the Ministry of Finance when making a purchase. The Ministry must ensure that compliance measures are in place, so that an exemption from payment of Ontario's gasoline tax is granted only to persons who are entitled. To get a gas card, you need to be a First Nation individual who has a Certificate of Indian Status card (CIS card) issued by Indigenous and Northern Affairs Canada (INAC), or First Nation band.

Gasoline tax is collected by ministry-designated Collectors (e.g., authorized bulk distributors or wholesalers) from First Nation on-reserve gasoline retailers who purchase gasoline (tax included) from them. Some Collectors are authorized to accept “vouchers” from retailers. These vouchers offer a credit equivalent to the taxes paid by the retailers that can be used for their next purchase of gasoline from their Collectors.  Collectors can then credit the vouchers remitted by on-reserve retailers from their taxes owed to the Province.

On-reserve gasoline retailers, in turn, sell gasoline to First Nation bands and individuals without collecting tax.  Retailers (who have not submitted vouchers directly to their Collectors) then apply for a refund from the Ministry of Finance for gasoline tax paid directly to the Collector.

Beginning in 2008, the Ministry of Finance began to offer an optional electronic service (e-service) that accepts electronic vouchers from retailers for gasoline tax refunds of tax-exempt sales to First Nation bands and individuals. The retailer may select a service provider (or act as its own service provider) that meets ministry specifications to participate in the e-service for retailers.

Approximately 28 per cent of all on-reserve retailers currently participate in the e-service option. Most First Nation gasoline retailers do not use e-service, and manually submit claims to the ministry.  Using the manual process, it can take up to forty (40) business days to receive a refund. During this time the retailer experiences an out-of-pocket expense when taxes have been paid but they have not received a refund.

For a more detailed description of the transaction process please read bulletin:

Authorized On-Reserve Gasoline Retailers: E-Service and Tax-Exempt Sales of Gasoline

Jurisdictional Perspective

There are several different approaches used in other Canadian jurisdictions to support the gasoline tax exemption.

Several provinces use the federal CIS card to verify entitlement, and use an approved electronic point of sale system for filing claims available from multiple electronic service providers.  Some of these electronic service providers offer “real time” service that enables retailers to immediately validate CIS cards.  It has been noted that the ability to validate CIS cards in real-time at point of sale has been highly beneficial for retailers and government for the purposes of decreasing the turn-around time for refunds.

Providing your input

The Ministry of Finance welcomes your input on modernizing the Ontario Gas Card Program. A number of questions are included below to help the Ministry of Finance to better understand your perspectives on the program.

You may provide your responses through regular mail to the following address or through email to the address included below by October 31, 2016:

Ontario Ministry of Finance
Program Policy and Analytics Branch
33 King Street West, 4th Floor
Oshawa, Ontario, Canada
L1H 8H5

Email: GasCard.Modernization@ontario.ca

To find out more about the Ontario Gas Card Program in Ontario, please read the publication Gas Card Certificate of Exemption.

Questions:

First Nation Individuals - Gasoline Purchases:

  • Have you had any difficulties using the Ontario Gas Card to purchase tax-exempt gasoline on-reserve?  If so, please describe these difficulties.
  • What could be changed to make it easier for you to purchase tax-exempt gasoline on-reserve?
  • How could using your Certificate of Status Indian Card to purchase tax-exempt gasoline on-reserve improve the current process?
  • What do you think about the other jurisdictional approaches outlined in this paper (e.g., use of the federal CIS card to verify entitlement)?
  • Do you think there is a different way to provide the gasoline tax exemption to First Nation individuals or to First Nation communities more effectively and efficiently?
  • Do you have any other suggestions or comments that you would like to share?

First Nation On-Reserve Gasoline Retailers – Gasoline Sales:

  • Specifically, have you experienced any issues with customers’ use of the Ontario Gas Card (e.g., presenting expired cards, not presenting a card at all)? If so, please describe the issues and how you addressed the issues.
  • How do you submit tax refund applications to the Ministry of Finance (e.g., manually or through an electronic point of sale system), and what has your experience been with the process?
  • If you currently submit tax refund applications manually, would the ability to process your refunds electronically benefit your business? If so, then how?
  • In what other ways could the gasoline tax refunds be delivered to First Nation on-reserve gasoline retailers more effectively?
  • Do you have any other suggestions or comments that you would like to share?

Gasoline Collectors and Wholesalers – Gasoline Sales:

  • As a Collector or Wholesaler what general observations do you have about the current Ontario Gas Card Program?
  • Do you have any other suggestions or comments that you would like to share?