Finance Minister Paula Cox got an early Christmas present ? a likely extra $50 million in tax revenues ? and shared the good news with the public last week.

For the most part the increase, mainly attributable to stronger than expected Customs duty and payroll tax returns, will be seen as good news.

It means Government will have to borrow about half of the $98 million that it said it would need in last February's Budget. That sum is now expected to fall to $52 million.

That is positive, not only because it means Bermuda will have less debt to repay, but pressure on current account spending will be lower too, especially since world interest rates are on the rise.

Government revenues will now increase to $800 million for the year ? roughly $12,000 for every man, woman and child resident in Bermuda. Of course, Bermuda residents do not pay all of that themselves, and that is part of the genius of the Island's taxation system. Some of the revenue comes from tourism, whether through departure and passenger taxes or through hotel occupancy taxes. Much more comes from the international company sector, either directly from corporate fees, or indirectly through payroll tax and the like.

That reduces the burden of taxation on Bermudians and non-Bermudian residents. But the burden is growing, and a careful guard must be kept on how much the Island charges its customers, whether they are tourists or international businessmen, without driving them away. It is clear that this has happened in tourism, and growing evidence that it is happening in international business.

Not all of that is due to taxation, but taxes contribute to the extraordinarily high cost of living and doing business in Bermuda.

Of course, no one would dispute that it is better to under-estimate revenues than it is to over-estimate them. But the best estimate of all is the accurate one.

The ideal is to keep a government budget as balanced as possible; in other words, to take in as much money in a given year as you are likely to spend, along with putting a reasonable amount aside for a rainy day or to pay off debt incurred for capital projects.

When that is done, it keeps money in people's pockets for them to spend as they see fit. It also imposes a certain discipline on the Government, which, unlike a business, does not have to earn its revenue, but can just demand more from the lowly taxpayer.

This Government has consistently overshot its expenditure targets. This is not a question of surprise windfalls or of it happening once or twice. With the exception of the 2001 to 2002 financial year, when tourism was wrecked by the September 11 terrorist attacks, it has missed almost every year.

In the meantime, taxes have increased and the size of Government has grown as well.

If Government keeps overestimating the amount of revenue it needs, and taking in more than it needs to run public services, then it is time to look at cutting selected taxes.

Bermuda may have no income tax, but deductions for payroll tax, social insurance, mandatory health insurance and the mandatory Government pension now account for something like 30 percent of a company's payroll.

This is a heavy burden for all businesses, and the severity is inverse to the size of the company, especially in terms of paperwork and bureaucracy. It is only likely to get worse if Government introduces its wholly unnecessary unnecessary insurance scheme to handle the Island's estimated two percent unemployment rate.

Despite that, the case for reducing this burden is not as strong as it is for reducing Customs duty. While there are no doubt plenty of reasons for the failure of Trimingham's, few would deny that Customs duty remains one of the heaviest burdens on what is left of the retail sector and a major contributor to the Island's high prices and lack of competitiveness.

They are also an appalling waste of capital since the duty must be paid before the good can be sold.

Customs duties also add to the overall cost of doing business for hotels, insurers, service companies and the like. They add to every individual's cost of living, and probably hit the poorest in the community most severely.

Ms Cox has remained coy about whether taxpayers will be "rewarded" in February for this latest over-estimate. She would do well to reward them with a reduction in Customs duty.