The Canadian Taxpayers Federation says P.E.I. Finance Minister Wes Sheridan is imposing a secret tax on Islanders, simply by not indexing tax brackets to inflation.

They call it "bracket creep".

Income tax exemption amounts for Atlantic Canada 2008 2009 2010 2011 2012 2013 PEI $7,708 $7,708 $7,708 $7,708 $7,708 $7,708 NS $7,731 $7,981 $8,231 $8,231 $8,481 $8,481 NB $8,395 $8,605 $8,777 $8,953 $9,203 $9,388 NFLD $7,566 $7,778 $7,833 $7,989 $8,237 $8,451

P.E.I. is one of only three provinces, in addition to Nova Scotia and Manitoba, that do not index tax brackets to inflation.

The province has not raised Islanders' basic income tax exemption of $7,708, since 2007.

The federation says Islanders who earn $25,000 or less are paying $17 per year more because of bracket creep.

Someone earning $60,000 a year pays an extra $46 annually.

Scott Hennig, with the Canadian Taxpayers Federation, says the decision not to raise personal income tax exemptions hurts people who make the least amount of money.

“Not indexing, not moving your tax brackets up by the inflation every year, really is a tax increase. And it's an increase often on the lowest-income people in your province. Not doing it is raising taxes, doing it is not a tax cut, contrary to what the minister is claiming,” he said.

The issue came up in the P.E.I. legislature this past week.

Sheridan says he does not believe in indexing.

He says if and when he balances the budget, he will target savings for single parents, seniors and people on low incomes.