Odds are that Finance Minister John Manley's will favour "investments" in aboriginal programs, climate-change initiatives and transit funding for urban regions. And of course, health care. We can also expect some tax relief. But more can be done in this area.

A move to phase out or even abolish the corporate capital tax is probable, along with an increase in RRSP contribution limits. But taxpayers looking for personal income tax cuts are likely to be disappointed. This is unfortunate as further personal income tax relief is indeed the proper course for the government to follow.

The facts speak for themselves. According to several economists, the feds will post a surplus (read: over-taxation) of $8 billion this year and close to $12 billion in fiscal year 2003/2004. Moreover, the most recent Department of Finance Fiscal Monitor reveals that the government has run a surplus of $8 billion for the first nine months of the current fiscal year. So the question logically becomes not if personal income taxes should be cut, but how?

The ideal place to start would be to raise the basic personal exemption (BPE) from its current level of $7,756 to $15,000 in five years, or less. Why $15,000 you may ask? Simply stated, $15,000 is roughly the average amount earned (before taxes) by a minimum wage employee. Why do we tax these people who are just entering the workforce, considered working poor, or just looking to earn a few extra bucks to make ends meet?

The importance of this question becomes self-evident when one considers that we recycle a good deal of the taxes paid by minimum wage workers back to them in the form of GST credits and other tax benefit schemes. Here's a novel idea: Instead of taxing almost half their earnings (at 16%) and creating jobs for tax bureaucrats to recycle this same money back to them in the form of quarterly entitlement cheques, why not simply raise the BPE and leave more - if not all - of this money on their paycheques so low-wage earners can have the dignity of better providing for themselves on a daily, weekly and monthly basis?

Canadian Taxpayers Federation calculations peg the maximum cost of raising the BPE to $8,000 at $602 million and if the spousal exemption (currently at $6,586) is also hiked to $8,000, the total impact would equate to $1.3 billion. A move to hike the BPE to $10,000 would cost $5.5 billion and combined with an equivalent increase in the spousal exemption would result in a $7.2 billion impact - removing almost 588,000 Canadians from the tax rolls.

Getting to the target BPE amount of $15,000 would represent a $17.8 billion maximum impact on the public treasury or a $22 billion hit (read: tax cut) if the spousal exemption is increased to $15,000 as well. This would remove over 2.1 million Canadians from the tax rolls. Spread over five years, it would be relatively easy to allocate $4.4 billion annually to bump the BPE to $15,000.

From a fiscal perspective this is affordable. From a social justice perspective, providing tax relief for all Canadians but most specifically lower-income Canadians is very compelling. Similar to the federal governments move to re-index the tax system to inflation - a nation campaign led by the Canadian Taxpayers Federation - thereby ending bracket creep, raising the basic personal exemption blends good fiscal policy with great social policy.

George W. Bush's recent tax-cut plan ensures that a family of four earning $40,000 or less will pay no federal income tax. A similar Canadian family starts to pay taxes at $27,000. Raising our basic personal and spousal exemption is really not a question of choice, it's an absolute necessity.