Finance Minister Paula Cox presented her first Budget Statement today with a number of tax increases and a big increase in capital spending.

A stronger than expected economy in 2003 enabled Ms Cox, who succeeded her late father as Finance Minister in January, to hold down down tax increases.

But most employers will pay an extra 0.75 percent in payroll tax, smokers will spend an additional 50 cents for a packet of cigarettes and car owners and public transport users will also see costs go up.

In addition, a raft of Government fees will increase foir the first time in two years.

But Ms Cox surprised pundits when she said land tax would not increase following a revaluation of properties later this year.

Pensioners also got a Budget present when Ms Cox said pensions would increase nine percent this year. That increase is being funded this year by $2 million of the $11 million given to Bermuda by the US when its bases were handed over.

Capital spending will also increase this year, with work beginning on a new Hamilton Police Station and courthouse and a $56 million third stream being added to the Tynes Bay Incinerator.

As announced yesterday, an additional $13 million has been added to the bill for the second senior secondary school.