Long overdue, and short on tax cuts, the NDP has delivered its pre-election budget.

The provincial budget finally arrived this week some 22 days after the fiscal year ended (requiring $1.9 billion in special warrants). There is a little bit for everyone: more money for health care, bigger welfare payments, more cash for education, tax credits galore, and yes, even one income tax cut - uh - sort of.

The middle income tax bracket will fall to 14% in January of 2004 - a nice gesture for the government to give us back some of our hard-earned money, but Manitoba still falls well short of Saskatchewan and Alberta. But the budget, conveniently, has left out the elimination of bracket creep - which eats up most of the savings from this modest tax cut.

What is bracket creep you ask Simply put, bracket creep is a tax policy that allows income taxes to increase without a rate hike. In essence it is akin to legalized theft and the provincial government has made off like bandits. It works by over-exposing your inflation driven income to the static tax thresholds. The bracket creep tax raid is the difference between the income taxes you pay now and the fewer taxes you would have paid if tax brackets and credits rose with inflation.

Partial de-indexation, introduced by the feds in 1986 but eliminated in 2000, allowed the income tax system to lag behind inflation. Here in Manitoba, the provincial government has taken advantage of a move away from provincial income taxes based on federal income tax payable - the new system introduced in 2001 is based on Tax on Income - to avoid indexing the brackets. As a result, Manitoba's tax thresholds and credits are not indexed to the rate of inflation. In fact, the thresholds have remained the same since 2001.

You might ask, what does this mean Well, in 2002 the province collected $700 million in taxes from the middle tax bracket. With the 6% reduction, $42 million less will be taxed into the provincial coffers in 2004, however, thanks to bracket creep $34 million that would not have been taxed will continue to flow in, with a net difference of $8 million in tax savings. So the 6% cut is actually only a 1% tax cut.

In real dollars someone making $40K will not save the $300 the province would have us believe when you account for the bracket creep your real tax savings will only be about $48. As it turns out, not all tax cuts are created equally.

So whom do we have to thank for this stealth form of taxation The feds have eliminated the bracket creep, but since moving to a tax on income Manitoba's bracket creep blame lies with our provincial government.

Taking the path of least resistance, the Manitoba government decided that tax revenues could be raised without visible tax hikes by refusing to index the tax system for inflation.

When Doer et. al come knocking in the next few weeks to tell you that Manitoba is one of the most competitive provinces to live and work, double check your income tax receipts. This mediocre tax cut does nothing to put Manitoba at a competitive advantage - it simply reaffirms how over-taxed we are.

Premier Doer, thanks for the mediocre 1% tax cut.