Manitoba's coffers are set to grow by $1 billion in the next three years. No, it's not because our province is having an economic boom. Rather it's due to the fact that Alberta, Saskatchewan, Ontario and BC are. Manitoba's welfare payments through equalization and transfers are set to increase, again.

And the NDP government couldn't be happier with millions more to spend. It gives them the chance to offer up goodies for the electorate in the upcoming budget set for April 4th. But with an election in the not so distant future, the question is, will the NDP squander that money away on pet projects, or return it to the hard working Manitobans, who are handing more than half their income to governments

The short answer is, it's anyone's guess. Logically, they should take a hacksaw to the personal income tax rates in Manitoba, which are the highest west of Quebec. However, logic and government seldom go hand in hand.

This writer is optimistic the current provincial government will bring forward income tax reductions. If anything, it's a way to secure votes and take the wind out of the sails of the Opposition Tories who will likely have income tax reductions as a key plank in their election platform. More important, tax reductions can help put Manitoba on a course to self-sustaining, economic prosperity - one day less reliant on handouts from other parts of the country.

When the provincial government began minor annual reductions to the middle income tax rate, revenues increased. In the past two years, provincial income tax revenues have grown by $127 million.

Reducing personal income taxes should be the government's first priority. Personal income taxes account for 35 percent of provincial own-source revenues. And in the context of fostering economic growth, opting to tax less from a larger number of taxpayers, creating incentives to earn, save and invest, is always a good policy.

The Canadian Taxpayers Federation has recommended in the upcoming budget the basic personal exemption (BPE) be raised to $9,000 and the three tax rates be set at 10 percent, 12.5 percent and 17 percent - fully indexed to inflation. Long-term planning will allow the provincial government to cut rates further and raise the BPE to $11,000 by 2010/11. The government should no longer tax the working poor. Moreover, the impact for low income Manitobans will be substantial, while also encouraging greater labour participation among this group. In addition, raising the BPE is a tax cut for everyone, regardless of income.

Ensuring a prosperous and growing economy, that is not based on welfare payments from other governments should be the major focus for Manitoba's politicians who need to move beyond the usual rhetoric and act by reducing taxes. It's not just a question of matching the oil-driven prosperity of Saskatchewan and Alberta, but also the more varied economic dynamism of British Columbia and Ontario.

The provincial budget will give taxpayers a good indication as to what kind of fiscal foundation will be built for the future, and if deep cuts to income taxes are not part of it, then Manitoba will continue to play second fiddle to our provincial neighbors both east and west.