He also said Government had lots of its own "fat'' it could trim if it needed more money.

Mr. Michael Collier, president and chief operating officer of the Bank of Butterfield, charged, "Government appears to regard it as convenient and politically expedient to pass a disproportionate share of its revenue-raising requirements onto the three local banks.'' In the last Budget, Government increased banking licence fees to $1 million from $750,000.

The Bank of Butterfield last year posted profits of slightly more than $30 million.

Mr. Collier, in a letter to shareholders, wrote, "At the end of the day, taxing local service-providers will tend to mean higher prices for our international business clients, a further erosion of Bermuda's competitive edge, and a consequent loss of local employment and future economic opportunity for the Bermudian public.'' He also said Government should consider cutting spending before raising taxes.

"Rather than simply increasing taxes, Government needs to look with a greater sense of urgency at cutting the considerable fat which exists within its own ranks. Certainly there are areas where we believe Government expenditure could be reduced without any detrimental impact on the Bermuda public.'' He also criticised the imposition of a new capital gains tax on the sale of homes by non-Bermudians.

"International businesses and wealthy foreign guest residents do not, of course, possess the vote, but they are quite capable of voting with their feet if Bermuda becomes a less attractive environment in which to conduct business and reside,'' Mr. Collier wrote.

"Bermuda is already viewed as an expensive place ... A government which is increasingly characterised by big spending, high taxation.

unpredictability, and a tendency towards greater interventionism in its dealings with the private sector economy, runs the risk of seriously damaging that which it seeks to improve,'' Mr. Collier wrote.

He also urged Government to look carefully at its "overall efficiency'' and to "consider the merits of a programme of privatisation.'' Mr. J. Michael Collier