Happy New Year Manitoba! Congratulations on making it through another taxing year. As you sit at your kitchen tables pouring over the holiday bills, don't be too discouraged - you're getting a tax break!

That's right - all of that money you charged for little Jannie and Johnny's new skates, video games, clothes and toys will be a little bit easier to pay off when you file your tax return this year. Among this list of goodies both the federal and Manitoba government is bestowing upon us (read: giving us our money back!) is a one point reduction in the GST, increase to the basic personal exemption at both levels of government and a reduction to the low and middle tax rates.

Federally, the bottom tax rate fell from 15.5 to 15 percent - but don't forget, the Conservative government raised it, then saw the light and reduced it again in the fall economic update. An increase to the basic personal exemption is a tax cut for all Canadians, regardless of income with the exemption rising from $8,929 to $9,600, with a further increase to $10,100 by 2009. The added bonus with these tax changes is they are retroactive to 2007, meaning you can expect a refund when you file your 2007 taxes.

The federal government has also offered up some relief to families with a new $300 child tax credit and increase to the spousal exemption. The Canadian Taxpayers Federation (CTF) estimates, on average, these savings to be close to $230. That may not sound like a lot, but when you factor in a one point reduction to the GST, Canada's most hated tax, overall savings are closer to $400. In the case with the GST of course, the more you spend, the more you save.

Not to be outdone, the Manitoba government is also offering some relief. Although previously announced in 2007, the NDP government will be taking a little bit less out of your pocket in the next year with a $200 increase to the basic personal exemption and a reduction to the middle tax rate from 13 to 12.75 percent. These changes, unlike the federal ones, are not retroactive and came into affect on January 1, 2008.

But before you put a match to your credit card bill, the Manitoba savings won't be as significant as they could be because the province yet to index tax brackets to the rate of inflation. Much of the tax relief will be eroded by bracket creep. The CTF estimates the provincial savings to be around $80/year, had our tax brackets been indexed, savings would have been closer to $100.

The upside of all these tax changes is that to some degree, governments recognize their citizens are over taxed. The changes are very modest, but our politicians deserve some credit for at the very least moving the yard sticks in the right direction. Both the levels of government, however, need to do more to put our money back into our pockets, considering the huge surpluses they are amassing. That said, ringing in 2008 with some much needed tax relief is encouraging and maybe there truly could be a turkey in every pot.