Now that the fear of the Y2K computer bug has died down, Canadians can begin to concern themselves with something that's really going to disrupt their lives, namely taxes. Here's a few of the tax changes that take effect on January 1, 2000.

At the federal level some taxes are going down while others are going up and taxpayers can only hope it doesn't cost them too much (read: accounting fees) to make sense of it all come tax time this spring.

The Good (Sort of)

On a personal level, some small tax relief kicks in on January 1. In the 1999 federal budget, the basic personal exemption (BPE) was raised by $675 from $6,456 to $7,131. This amount included the $500 supplementary credit (announced in the 1998 budget) which had only been previously available to individuals with incomes less than $19,500.

However, the BPE increase was only effective on July 1, 1999, therefore the annualized BPE for 1999 was only $6,794 or a $338 increase over 6 months. In other words, the full effect of this measure will only be felt by taxpayers in the year 2000.

In addition to the BPE increase, the spousal and equivalent-to-spouse credit amounts also rise by $675 on January 1 with the full exemption of $6,055 available to taxpayers for the 2000 taxation year.

While these increases may seem generous, taxpayers should keep in mind that the BPE remained unchanged since 1992 until last February's budget. In other words, the federal government really hasn't even played catch-up for inflation since 1992. An increase of $820 would have been needed to do this, instead of the $675 that was provided.

Other targeted measures for seniors, including OAS, GIS and CPP top-ups also take effect on January 1. But our seniors shouldn't jump for joy anytime soon. For example, the maximum CPP and OAS payments are increasing by $135 and $90 respectively. Wow, a whopping $225 annual increase for seniors.

The Bad (Payroll rip-off)

While Canadians earning $39,000 or above can expect the maximum Employment Insurance (EI) premium reduction of $58.50 to take effect in the New Year, they better not put the money in the bank. While EI taxes are down, this same $39,000 worker will pay an extra $143.40 in Canada Pension Plan (CPP) premiums on January 1st. The net effect, an $84.90 increase in payroll taxes for Canadian workers.

And employers don't fare much better. When EI decreases and CPP increases are factored together, your boss is on the hook for an extra $61.50 for you and each of your colleagues in the office.

Here's a safe prediction for the New Year -- higher payroll taxes will cause a drag on employment and pull down workers' wages.

The Ugly (from Sheila Copps)

Let's not forget the tape tax, er excuse me, tape levy imposed by Heritage Minister Sheila Copps. On December 17th the Copyright Board announced new levies on blank recording media. At the end of the day (assuming tape manufacturers pass this levy onto consumers, which they no doubt will) a 40-minute (or longer) cassette tape will cost you an extra 23.3 cents and recordable CD media as much as 61 cents more.

On balance, taxpayers are no further ahead in Y2K. Therefore this makes it all the more imperative that you write, phone, fax and/or e-mail Finance Minister Paul Martin and ask one simple question for Budget 2000: Hey Paul, it's Y2K, why not give us real tax relief After all, it is our money to begin with!