reply to the Budget yesterday.

And he claimed a Progressive Labour Party Government would probably bankrupt the Island.

Shadow Finance Minister Mr. Cox's response was "weak in content and fact'','' he said.

"It offers no real meaningful solutions, no quantification of costs, no budgetary processes. It is an accumulation of comments, suggestions, and innuendoes which will cause more confusion to the public.'' Sir John also fiercely defended Government's record in looking after Bermudians.

"This Country has been the great success story of the world.'' He added it was wrong for the Opposition to blame crime on Government.

This sent out a message suggesting Bermudians could be excused for lawlessness.

It encouraged the belief "you are right to do lawless things'', said Sir John, provoking an outcry from the Opposition benches.

Sir John began his speech by chiding the PLP for not presenting him beforehand with a copy of Mr. Cox's Budget reply. This was discourteous.

"It is unfortunate, in the spirit of cooperation, that the Opposition did not give us an opportunity to have a copy of their response as they have historically done.'' He complained it was difficult to follow an incoherent speech without the text.

"I would have liked to peruse it while it was being delivered.'' Sir John continued by heaping praise on Finance Minister the Hon. David Saul for his seventh Budget, and for steering Bermuda skillfully through the recession.

It had not been an easy task, and some measures had been unpopular.

But hindsight had demonstrated Dr. Saul had taken Bermuda in the right direction.

"I don't know another Country in which Mr. and Mrs. Public is so well looked after.'' This flew in the face of what the Opposition had been saying.

"The amount of money being spent on capital investment and operating costs is unmatched,'' he said. "I don't know of another country whose rating is on a level with ours. We have a double A1 rating.'' Sir John turned to education, saying Government was pumping $47.6 million into this area -- an enormous amount considering how many private schools there were.

Government had also fulfilled its social responsibilities, but it could only do so much.

People had to accept their share of responsibility for what they do.

"Government can only provide within reason, within a budgetary process. The most we can do is provide a reasonable set of circumstances within reasonable means.

"There are people out there who take advantage of the means out there, but there are people who are waiting for the magic to happen.'' Sir John said Government was also funneling significant funds, $48 million, into health care.

"It is a considerable amount of money.'' He added he did not know of any other country doing more for its people per capita than Bermuda. And this included Canada, the United States and Great Britain.

Sir John said there had been one side-effect to Bermuda enjoying the good life.

Bermudians had taken all the benefits for granted, just like children who automatically assumed parents would provide for them.

One day, however, they may find such support no longer there.

Sir John went on to address the Opposition's call for improvements to tourism.

"We all want to make improvements,'' he said.

And he added there was a need for the hospitality industry's image to be spruced up.

"We need to change the feeling that working in hotels is not attractive.'' Sir John continued by claiming Bermuda's economy was on the mend.

And, contrary to what was being reported in the papers, Independence had not stymied the growth of international business.

Last year saw the fastest expansion in this sector, and Sir John predicted international companies would continue to put down roots in Bermuda.

"Tourism is up, the gross domestic product grew last year and the country remains in a relatively healthy state.'' Employment opportunities in managerial and technical areas were also increasing.

Sir John took a swipe at Mr. Cox for suggesting Government was introducing a form of income tax.

"He does not have a clue about income tax. Have you ever filled an income tax form for the United States,'' he asked.

Sir John said Government had tried to redistribute the process of taxation as the Country emerged from recession.

And turning to capital gains tax, Sir John said he was disturbed by the Opposition's stance on this.

It was entirely correct for the Country to benefit financially from real estate ownership.

"How do you look after people unless you do it by financial means?'' Sir John accused the PLP of speaking with "forked tongues'' as it attempted to appeal to different sectors of the community in its hunt for votes.

But the Opposition had not stated how it would provide resources to look after Bermudians.

If it ever came to power, it would probably bankrupt the Country.

Sir John then switched to the Bases issue, praising Management and Technology Minister the Hon. Grant Gibbons for his key role in helping to smooth the handover of the lands.

Dr. Gibbons was doing his job quietly -- and Bermuda probably did not appreciate the magnitude of the task.

With the transfer of the lands, Bermuda was being handed a "ghost town''.

It was important the Island used the lands to generate more foreign exchange, and to continue keeping the inflation rate below that of the US.

Sir John continued by chastising the Opposition for continually talking Bermuda down, and belittling its achievements.

In education, for instance, 64 percent of young people leaving school were going on to colleges or universities.

This compared with 32 percent in the US and 15 percent in Japan.

It was nonsense for the Opposition to claim the education system had failed.

The truth was that Bermuda had tremendous expectations and wanted to do even better.

It was wrong to continually blame poor facilities for failing to reach such standards.

Buildings wouldn't solve problems -- the key lay with having the correct attitude.

Sir John said he had a difficulty trying to quantify the Opposition's response because it was a "philosophical'' document even though he had time to read it.

He said it contained a lot of giveaways without any suggestions about how revenue would be raised to pay for them.

And the PLP must avoid "promising what they cannot deliver''.

Instead he said his Government was committed to ensuring that Bermudians were well educated and ready to participate.

Sir John said he was proud of the work done by the Minister of Education in restructuring the education system, because the whole point of the reform was to put in training facilities at the middle and senior school levels so Bermudians can fit into a new Bermuda.

"We can't do that on a whim,'' he said. "We need sound fiscal policy. We are only 21 square miles with 45,000 Bermudians and an additional 14,000 non-nationals.'' While agreeing with the Opposition that Bermuda needed a cultural centre, Sir John said that it was not feasible at this time.

The Premier pointed out that while growth was essential for Bermuda's economy, there were limits to taxing businesses because above a certain tax level they will lose their incentive to create wealth.

Bermuda, with a per capita income of $31,000, was enviable, Sir John said.

This income was distributed in many forms.

"We are the best housed country in the world, the best educated per capita with health care, opportunity and upward mobility, but we tend to devalue and undervalue this and pass on this negativism to our young people.

"The system is working well for a lot of people across all racial and social lines.'' Sir John said it was important to send positive signals to young Bermudians and encourage them to move ahead.

Opposition Leader Mr. Frederick Wade praised Shadow Finance Minister Mr.

Eugene Cox's response to the Budget as a "well crafted, first class piece of economics that was well written and a testament to the English language''.

"We are satisfied that the UBP have introduced income tax to our tax structure,'' he added.

Mr. Wade said that although Dr. Saul had not gone on to introduce the full range of items associated with income taxes, like deductions, what he had done amounted to income tax although taxes on dividends and profits were excluded.

And this amounted to "income tax UBP style''.

"The PLP made it clear we would not introduce income tax although we were accused of introducing income tax,'' he said.

Although Dr. Saul said this budget would not affect the "small man'' adversely, Bermudians will soon find out that "the tax man has not been so kind after all''.

The Opposition Leader said the six per cent increase in charges on hotels will have the effect of increasing the cost of a Bermuda vacation at a time when the "hotels are already catching hell''.

This he said was a clear example of Government's "hop scotch economic planning''.

Mr. Wade said the PLP have been asking for a review of the entire tax system for the past five or six years so a better assessment of where the burden falls and how equitable the current system really is could be made.

The capital gains tax. Mr. Wade said, could have a detrimental effect on international companies who rent and buy expensive homes in Bermuda.

"This Government is hitting them with the very tax (they) promised never to hit them with.'' Tourism Minister the Hon. C.V. (Jim) Woolridge (UBP) said he felt sorry for Mr. Cox who was burdened with the responsibility of making something out of nothing.

Mr. Woolridge said it was simply untrue that Tourism was in a downturn. He said Bermuda was operating in a competitive environment with winter reductions in Caribbean countries which were able to slash prices because their costs were lower.

Mr. Woolridge said that per capita, air arrivals had increased by 3.8 per cent.

"These people (air arriving visitors) create employment,'' he said. "We are not in the doldrums. The opposite is true.'' Mr. Woolridge said it was true that there needed to be more Bermudians in senior positions in the larger hotels, but it was wrong for the PLP to be so critical when many small hotels have Bermudian managers who had been trained at the larger hotels.

"Government is concerned about Bermudians,'' he said. "But don't lose sight that the larger hotels are often training grounds.'' Mr. Woolridge invited Bermudians to purchase Club Med and said Government had done its best to find a buyer for the property.

Shadow Tourism Minister Mr. David Allen (PLP) said: "I would consider this budget the stealth Budget. I call it so because you have to look at the underlying impact especially when it affects the tourists and the hotels.'' Mr. Allen said the six percent "occupancy tax'' was a misnomer because it will apply to other things besides the room rate and this will impact on the hotel's ability to be competitive because it will increase the cost of a Bermuda vacation.

Moreover the increased departure tax will also affected Bermuda's competitiveness because the Island already suffers from the perception of being expensive.

Mr. Allen said that Government was not putting the kind of pressure on Club Med that was needed and that the PLP would be watching the situation closely.

Mr. Trevor Moniz (UBP) said the PLP response to the budget was neither "here nor there'' and he found the Opposition's stance on the capital gains tax interesting since the PLP claims to be representing "the working man''.

Although there were some details to be worked out, the 10 per cent capital gains tax was fair, since for many non-Bermudians, such taxes are higher in their countries of origin.

Although Bermuda had just come out of a recession, Mr. Moniz pointed out that some industries were doing better than others.

As a consequence it was fair that those who were doing better (such as lawyers, architects, accountants) would be hit.

Mr. Moniz said that generally Government's tax agenda was more progressive than in previous years because it was taxing those most able to pay.

Meantime Mr. Stanley Morton (PLP) said he was concerned about the plight of the "common man'' and the main concern of the PLP was how this budget affected him.

Mr. Morton said the UBP was practising "the art of deception'' because they had not explained how many of the new foreign companies that had recently set up in Bermuda were active or "shelf companies''.

And what the Budget amounted to was a "psychological approach intent on deceiving the little man''.

Mr. Morton scoffed at Government's decision to increase the fees at the banks and for professionals because it will be passed on to ordinary Bermudians anyway.

Management and Technology Minister the Hon. Grant Gibbons (UBP) said the Budget should not be looked at in a vacuum.

Instead it should be looked at in the context of the last six years.

The only reason Government was in a position to tackle the Base transition and the Airport takeover, was because of planning and forethought since 1989.

And it was unclear how the PLP could charge that Government had introduced income tax when had introduced a payroll tax.

"Income tax is all pervasive,'' he said. "This tax is not at all pervasive.

It is simply a myth that income tax goes after the rich. It is the middle classes that bear the brunt of it.'' Concluded in tomrrow's newspaper.

The Hon. Sir John Swan Mr. Frederick Wade The Hon. C.V. Woolridge