In the Spanish Civil War, they were the local supporters of the four rebel columns that advanced on Madrid. On the ice, they are fans that drown out the arena and demoralize the visiting team. They are the fifth column - the behind-the-lines enemy sympathizers.n the Spanish Civil War, they were the local supporters of the four rebel columns that advanced on Madrid. On the ice, they are fans that drown out the arena and demoralize the visiting team. They are the fifth column - the behind-the-lines enemy sympathizers.

To the taxpayer, fifth column taxation takes the form of 'bracket creep' - a hidden tax raider that advances on your pocketbook as inflation exposes more and more of your income to the clutches of the tax collector. The bracket creep tax raid is the difference between the income taxes you pay now and the taxes you would have paid if tax brackets and the basic personal exemption (BPE) were indexed to inflation.

Bracket creep has taken its toll. In 1998, a Manitoban with a taxable income between $36,624 and $59,180 will pay $1,339 in new taxes owing to the impact of bracket creep. Of that, $887 goes to Ottawa, and $452 finds its way into the provincial treasury. Between 1989 and 1998, the same income earners each paid a total of $7,986 more in taxes than they would have paid if the tax brackets and BPE were indexed to inflation.

The Mulroney government breathed life into bracket creep in 1985 to control the national debt. Then, the tax brackets and the BPE were changed to partial indexation. This is how it works.

When the inflation rate exceeds three per cent, the excess amount becomes the indexing adjustment used to increase the BPE and the tax brackets for the following year. Given that the rate of inflation has not exceeded three per cent since 1993, the tax brackets and the BPE have since remained frozen. Meanwhile, the inflation-driven incomes of Canadian taxpayers have been increasingly exposed to higher tax brackets. This phenomenon, known as bracket creep, amounts to taxation without representation, given that the transition to partial indexation was not put before parliament.

Bracket creep is particularly cruel to middle and low income earners. The House of Commons Finance Committee estimated that between 1995 and 1997, bracket creep added over 840,000 low-income families to the income tax rolls. racket creep is particularly cruel to middle and low income earners. The House of Commons Finance Committee estimated that between 1995 and 1997, bracket creep added over 840,000 low-income families to the income tax rolls.

Think tanks from the left and the right have made equally damning observations. A recent report by the C.D. Howe Institute found a family earning $30,000 to $40,000 will pay $1000 extra in income taxes each year owing to the impact of bracket creep. And a study by the Caledon Institute found that federal tax revenues are currently more than $10 billion (16 per cent) higher than they would be under full indexation.

The verdict is in. Bracket creep is the fastest growing tax in the land and it outstrips federal and provincial tax cuts combined.

Provincial governments will wash their hands of the matter explaining that Ottawa alone sets income tax brackets. But, the Manitoba government still benefits from those distorted scales. Compare the $452 provincial bracket creep take in 1998 with the $89 savings a Manitoba employee at $50,000 realized from last year's pint size income tax cut. The difference is an extra $363 in provincial tax revenues.

The Province can no more absolve itself of responsibility over bracket creep than it can turn its back on the federally funded and ailing health care system.

The Filmon government should do its part to insulate Manitoba taxpayers by cutting income taxes by an amount equal to the provincial bracket creep tax take. A six-point individual income tax cut would return approximately $534 back into the pockets of the $50,000 wage earner, and partially close the growing tax gap with Alberta and Ontario.he Filmon government should do its part to insulate Manitoba taxpayers by cutting income taxes by an amount equal to the provincial bracket creep tax take. A six-point individual income tax cut would return approximately $534 back into the pockets of the $50,000 wage earner, and partially close the growing tax gap with Alberta and Ontario.

To keep our heads above water, Ottawa will have to plug the income tax leak by restoring full indexation of the tax system. Lowering income taxes and indexing the BPE and tax brackets fully to inflation would restore fairness, transparency and accountability to the tax system.