"Tax cuts create jobs," proclaimed Ontario Finance Minister Ernie Eves. Truer words were never spoken. Thanks in part to a 30% income tax cut over the past four years, the Ontario economy forged ahead in 1998 with a growth rate of 4.2% (double the Canadian average) and 200,000 new jobs.

Act two of the Ontario revolution takes the form of a 20% income tax cut over the next five years, settling at 32.5% of the federal tax by 2004. For the 1999 tax year, Ontario's personal income tax rate will be 39.5%, by far the lowest in land.

Manitoba can also boast a string of economic successes but the rewards have yet to be passed on to taxpayers to the same degree as in Ontario. The 1999 Manitoba budget sets the income tax rate at 48.5% for the 1999 tax year, nine points behind Ontario, 4.5 points behind Alberta, and half a point behind Saskatchewan. The Manitoba rate drops to 47% for the 2000 tax year.

No one will begrudge the province for lowering taxes. But that provides little comfort for the lost opportunities for even lower tax rates.

For the most part, the 1999 Manitoba Budget is a photocopy of last year's estimates, highlighting spending as priority number one, followed by debt relief and tax cuts in the distance. By announcing a 1.5 % income tax cut for 1999, the province is simply putting a shine on spendthrift budget.

Total program spending is up $350 million. Health and education were not the only departments to record increases. Practically every government department got a raise as well. For example, Culture, Heritage and Citizenship wound up with an extra $6.6 million. Government services department is up $9 million this year.

The province was far less generous with taxpayers than it was with finding ways to beef up the size of government. The impact of the personal income tax cut and the small business tax cut was a paltry $56 million. In other words, for every dollar in tax cuts, spending is up by six dollars.

For every dollar in tax cuts, spending is up by six dollars.

Manitobans are no further ahead. The impact of bracket creep in 1999 offsets any savings from tax relief. The province will net an extra $113 million in extra income tax revenues on account of bracket creep.

For a Manitoban with a $30,000 income, the bracket creep income tax take for 1999 will be $155 to the province alone. Meanwhile, this year's tax cut will put $55 pack into his/her pocket, leaving a net loss of $100 to the province.

Don't despair. The recently announced Lower Tax Commission has an opportunity to recommend full indexation of the tax brackets and credits, reversing the impact of bracket creep. The CTF will press the Commission to adopt this policy.

The last missed-opportunity was debt relief. The province made its obligatory $75 million payment to the Fiscal Stabilization Fund, but fell short of doubling the payment two years in a row. The benefits of debt repayment are illustrated by the 7% saving in debt financing costs this year over last.

The Fiscal Stabilization Fund now stands at only $226 million, a far cry from the 5% minimum of annual expenditures recommended in the Balanced Budget law. The legislation allows for money to be withdrawn from the fund "to make up for revenue shortfalls." Shortfall is the not the first word that springs to mind to characterize this year's revenues in excess of $300 million.

The same hand that penned the Balanced Budget Law is now bending the rules to blunt criticism from noisy interest groups demanding more program spending in an election year.

Manitobans have cause to celebrate with this budget but little to boast about outside our borders. Our tax rates are neck and neck with NDP Saskatchewan and a country mile back from Ontario and Alberta. Let's not satisfy ourselves as a second rate tax jurisdiction.