Back in 1994, federal Finance Minister Paul Martin called payroll taxes a "cancer on job creation," pointing to the job-killing effect of Employment Insurance (EI) taxes and Canada Pension Plan (CPP) taxes. Alas, Mr. Martin's excellent rhetoric on the subject is betrayed by his contradictory action.

For starters, here is a look at the numbers: For someone earning $39,000, $2265.90 in total payroll taxes will be paid in 2000 ($1329.90 in CPP and $936 in EI). That is an increase of $84.90 over what they paid in 1999. Their employer will cough up $2640.30 in 2000 ($1329.90 in CPP and $1310.40 in EI) which is a tax hike of $61.50 when compared to 1999.

That one-year hike wouldn't cause anyone much discomfort if it were not part of a larger multi-year spike in payroll taxes. A $39,000 employee will pay $462.30 more in 2000 than they did in 1992. Their employer will pay $393.66 more in 2000 than they did in 1992. Want to know where that missing wage increase is It's been sent to Ottawa. Employees and employers now send over $850 more in payroll taxes to Ottawa (at a $39,000 wage) than they did back in the depths of the early 1990s recession.

Look at the extra payroll taxes through another prism as well. (Call it the jobs-that-were-not-created prism.) A business with 100 employees earning $39,000 each will have to pay $39,366 more in payroll taxes in 2000 than it did in 1992. Put another way, one extra job worth $39,000 is now sent to Ottawa every year when compared to 1992. Multiply that by a couple of hundred thousand businesses in Canada and you start to understand Canada's still-high unemployment rate.

And the future CPP taxes are scheduled to rise from 7.8% in 2000 to 9.9% in 2003 (split between employer and employee). That's up from 5.6% in 1996.

On balance, some of those payroll tax increases will be offset by lower income taxes. (That same $39,000 British Columbian will pay a dime - yes, a dime - less in overall direct taxes in 2000, when payroll tax increases and income tax decreases are combined and compared to 1999. Other income categories will see a slightly more generous break, though that's less certain when one takes into account higher user fees and the like.) But the problem with higher payroll taxes is that they are much more harmful to potential wage and job growth (see above) and also to the working poor.

For example, employers and employees start paying Employment Insurance taxes on the first dollar earned. Canada Pension Plan taxes kick in at $3,500, while income taxes don't start hacking away at a paycheque until an employee earns at least $7,131. And even when income tax breaks are given, that doesn't help businesses directly with the growing payroll tax load. And since businesses don't grow money on trees, that means higher prices for goods and services, or fewer wage increases, or fewer jobs created - or a combination of all three.

The federal Finance Minister recognizes the destructiveness of high payroll taxes, so the least he could do is cut EI taxes as fast as he hikes CPP taxes. How about it Mr. Martin