Last week this column examined the federal tax cuts that took effect on New Years Day. This week we'll look at the provincial picture. What provincial tax relief also kicked in January 1 and what do these changes mean for taxpayers

First of all, the old provincial income tax system (that included a Flat Tax, a High Income Surtax, and a Deficit Reduction Surtax) has been rolled into a new "tax on income" scheme with three different rates. For the 2001 tax year, taxpayers will now pay 11.5% on taxable income below $30,000, 13.5% between $30,000 and $60,000, and 16% over $60,000. The new basic and spousal provincial tax credits (the amount of income we can each earn tax-free) have been bumped up to $8,000 each, $1,500 per child, and a seniors supplement of $500.

The government's plan is to fully phase their proposed changes over the next two years. In 2002, the three rates will be lowered to 11.25%, 13.25%, and 15.5%, the child credit amount will be increased to $2,000 per child, and the seniors supplement will increase to $750. Only in 2003 will the government finally reach the final rates and thresholds of 11% on taxable income up to $35,000, 13% between $35,000 and $100,000, and 15% over $100,000. By that year, child credit amounts will become $2,500 per child and the seniors supplement will be bumped up to $1,000.

(It is also worth noting that only after 2003 when all the changes come into effect will the new system be protected against inflation to stop bracket creep from eating away at these tax savings).

The government estimates these changes will provide about $200 million worth of lower taxes in 2001 rising to over $440 million by 2003.

But that's only half the picture: there are also the sales tax changes to factor in. You may remember that the PST was expanded in the last provincial budget to include more goods and services. The list included repair services, used cars and goods, computer services, medicines and non-prescription drugs, maintenance services, dry cleaning, pet food, professional services and so on.

The total impact of the sales tax changes gains the provincial government another $140 million to $150 million in new revenue every year. Therefore the net result of the government's tax changes is only about $43 million in 2001 and $260 million by 2003.

Sound like a lot Maybe when compared with the piddly tax cuts offered up by the provincial government in the past few years, but not when you compare our tax cuts with those being provided to taxpayers in Alberta - the province that is gaining the most from Saskatchewan's brain drain.

Taxpayers in that province don't have to wait until 2003 to get real tax relief - they will see $1.5 billion in tax cuts this year alone. In Alberta, there is now a single rate of 10% for all taxpayers, the basic and spousal exemptions are now $12,900, and the system is fully indexed to inflation, thereby ending bracket creep immediately.

Those people who oppose meaningful tax relief may be right - Saskatchewan will never be Alberta. But let's be clear about one thing: our tax rates need to at least be within spitting distance of our neighbor if we hope have any chance of increasing opportunities and creating jobs to keep our young people here and attract more workers, entrepreneurs, and investors to our province.

Clearly, our government still has a lot of work to do.