Manitobans looking forward to a fresh start in 2002 will be disappointed by the provincial government's lack luster approach to inter-provincial tax competitiveness. Come January 1, 2002, Manitoba will charge the third highest personal income taxes in the country. Meanwhile, the other provinces race ahead to offer competitive tax structures and in the process poach our best and brightest talent.

Nevertheless, there is some movement to Manitoba's personal income taxes. The tax rate in the middle bracket falls from 16.2% to 15.4% and the top tax bracket increases from $61,089 to $65,000 in 2002.

It's not the kind of tax reform that makes Manitobans stand up and take notice or inspire local graduates to stake their futures in this province. The opposite is more likely to happen.

A Recent Statistics Canada report that 2,200 Manitobans quit the province between July and October for greener pastures cannot be explained in isolation of Manitoba's high taxes.

Not only is Manitoba falling behind in its tax rates, but it is one of the last provinces to refuse to index its tax brackets to inflation. The benefit of indexation is that it eases the tax bite by moving more of your income into the lower tax brackets.

By comparison, federal tax brackets will be indexed for an inflation factor of 3%. This is a result of the bracket creep victory (spearheaded by the CTF) that taxpayers won in the February 2000 budget.

Come January 1, the federal basic personal exemption (BPE) will rise from $7,412 to $7,634. While welcome, this is a far cry where the BPE should be right now, some $8,500 if our tax system had been fully indexed since 1986. Unfortunately, Manitoba's BPE stays the same as last year's $7,412.

Here's what you can expect on your next paycheque. According to the 2001 provincial budget, an individual with a $40,000 income can expect to earn an extra $103 this year over last. A family of four with two income earners at $60,000 will be crying all the way to the bank to deposit an extra $93 into the account in tax savings. We're not even in the range of a cup of coffee per day in tax relief.

Besides, Manitoba's miniscule tax savings are sure to be washed out by the impact of bracket creep.

Apart from the benefits of indexation, federal tax changes for 2002 are no better. Unlike last January, federal personal income tax rates will not be reduced.

The feds continue to crow about their $100 billion - on paper - tax cut. But this is hocus pocus accounting which factors in foregone revenues from bracket creep, counts child tax benefits as tax cuts and diminishes the total payroll tax burden.

Speaking of payroll taxes, while EI premiums are coming down by a nickel, CPP premiums will jump by 40 cents. Bottom line, a $41,000 employee will pay an extra $157 in payroll taxes next year: the largest annual jump in EI and CPP premiums in over a decade.

A new $12 federal flyer tax combined with an extra $157 more in payroll taxes for workers will take a bite out of Paul Martin's much lauded income tax cuts.

Meanwhile, Ottawa couldn't find one singly penny to cut in this month's budget. As a matter of fact, federal spending will increase 9.4% next year and over 20% over the next three years. Our debt remains at $547.4 billion and we continue to fritter away $110 million per day merely paying interest on this debt.