Budget '98 was tabled and we balanced our books for this first time in 28 years. Yet substantive tax and debt reduction eludes us and key questions remain unanswered.

How did we balance our books

On the backs of taxpayers! Over the past five years, spending decreased by $15.5 billion but tax revenues increased by $35 billion. Growth in tax revenues outpaced spending cuts by at least 2 to 1.

What about poor Canadians

At first glance, it looks as though Paul Martin helped low-income earners by raising the basic personal exemption (BPE) by $500 to $6,956. But hold on, this exemption is income tested and clawed back at an income level of only $20,000. And we must remember that the BPE has been stuck at $6,456 since 1992. If we were to index the BPE back to 1988, adjusted for inflation, the BPE would now be approximately $7,988. This increase is of little consequence to low-income Canadians.

What about bracket creep

Paul Martin has done nothing to reindex income tax brackets to inflation. Why would he Bracket creep has been a cash cow for him.

For every percentage point of inflation, tax revenues increase by $700 million. Since 1992, compounded inflation has run about 7%. This amounts to almost $5 billion dollar in tax increase on the backs of working Canadians.

Even the Liberal dominated Finance Committee recommended reindexing income tax brackets to inflation. Meanwhile, the OECD estimates that 18% of Canadians have been moved onto the tax rolls or into higher tax brackets due to bracket creep.

Tax relief for Canadians

Don't believe the hype! Yes the government has reduced the 3% surtax on Canadians with incomes of less than $50,000. But what about those Canadians between $50,000 and $65,000 Or Canadians who must still pay the 5% surtax

On average, this reduction will put $233 into the right-hand pockets of working Canadians by 1999, but over the same period the 73% hike in CPP premiums will suck $1,200 out of their left-hand pockets. Couple this with the continued effects of bracket creep and taxpayers should regard Liberal talk of tax relief with a grain of salt. Come to think of it, that's what they're getting.

What about the debt

It's not growing - but it's not shrinking either. The government's strategy is to grow its way out of debt. The theory is as follows. Economic growth means a larger GDP, and better economic output as measured in GDP means a lower debt-to-GDP ratio. Net public debt is now $583.2 billion. In the year 2000, it will remain unchanged at $583.2 billion.

But as a result of this inaction we'll actually pay more to service the debt. $41.5 billion this year, $43.5 billion next year and $45 billion in the fiscal year 1999/2000. Paul Martin believes it is wiser to spend $11.9 billion on programs than to reduce a penny of debt. Try explaining this one to your grandkids.

This government is still taking record amounts of money out of taxpayer pockets. And the Prime Minister has the gall to speak to the New York Economic Club next week and brag about our fiscal situation

In 1962, John F. Kennedy spoke to this same club and stated: "It is a paradoxical truth that tax rates are too high and tax revenues are too low, and the soundest way to raise revenues in the long run is to cut the rates now." Too bad, Chretien and Martin haven't figured this out.