Like any good optical illusion, the secret to a successful magic trick is pulling it off before anyone figures out how it happened. By that measure, federal and provincial finance ministers should have no problem finding Houdini-like work should their day jobs end. Over the last eleven years, Canada's governments have hiked taxes by $90 billion (yes that's a 'b') by skillfully using inflation and tax brackets to lift more money from taxpayer pockets.

In a deft 11-year slight of hand, governments moved up the tax brackets much more slowly than inflation. For example, in the case of the 1988 $27,500 tax bracket, it moved only to $29,590 by 1999, instead of the $36,991 where it should have been.

End result Someone whose taxable income was $27,500 in 1988 and received raises only for inflation, saw much of that raise kicked into a higher tax bracket. In this example, $7,401 is now subject to a 26% federal rate (plus provincial on top) instead of 17% plus provincial taxes. That taxpayer handed over an extra $9,418 since 1988 thanks to such "bracket creep."

When governments and tax-happy think-tanks claim that taxes haven't risen, they magically ignore the last decade's increasing payroll taxes, extra surtaxes, new user fees, and in this case - how governments pushed people into higher tax brackets via inflation. Federally, Ottawa took in an extra $69 billion worth of income tax between 1989 and 1999 thanks to bracket creep taxes, $10.7 billion of it last year alone. The provinces raked in an extra $20.5 billion, $2.6 billion of it just last year.

Closer to home, BC's taxpayers shelled out over $13.2 billion in extra tax since 1988 simply because governments did not index tax brackets for inflation. $9.5 billion of that went to Ottawa, and the other $3.7 billion went to Victoria.

And here's a figure to remember the next time BC's politicians wail about a lack of taxpayer transfers from Ottawa: fully 10% of the BC government's personal income tax revenues, or $532 million, went into BC's treasury last year because of bracket creep. If a stealth tax increase now worth (annually) more than three fast ferries isn't enough "help" from Ottawa for BC's politicians, what more can an obliging federal government do

For taxpayers and journalists who want to closely observe the budget tax magic over the next little while, here are two moves to keep your eye on as finance ministers deliver their budgets:

Does Paul Martin fully re-index tax brackets for inflation If he doesn't, then inflation (and higher payroll taxes) will, over time, whittle away at any trumpeted tax relief just as it has in the past.

The second move to watch is how fast the provinces de-link from the federal tax calculation system and how they do it. As Ottawa reduces taxes, and especially if tax brackets are indexed for inflation, the provinces (most of whom piggyback on the federal rates) will scramble to avoid falling tax rates even though they've richly benefited from the cozy arrangement thus far.

Unless the provinces lower their taxes as they de-link from Ottawa, it is a sure sign they are attempting to abscond with the annual extra revenues that 11 years worth of bracket creep has produced. Look for that to be the next magic trick.