Since coming to power in 1998, the Progressive Labour Party has placed the Island's finances in the hads of the fatherand daughter team of the late Eugene Cox and his daughter Paula.

They proved to be sound managers of Government's finances while presiding over a decade of growth as the economy proved its resilience.

Ms Cox in particular can look back at her first four Budgets with some pride. On the back of a strong economy, she was able to increase public spending without having to increase the tax burden in a material way. And for the first three years, she did not have to add to the Island's debt particuarly as better than expected tax revenues making borrowing plans redundant.

If she could be faulted, it was for not doing more to curb the growth of the public sector and for not taking the opportunity to reduce the level of Government debt.

This year is different. The costs of the determinedly vague promises made by the PLP in the December election are now coming home to roost, and Ms Cox has had to raise taxes in a substantial way for the first time since she became Minister.

The bulk of these tax increases will affect businesses, and will add to the difficulties that local and exempted companies have in remaining competitive.

Increases in payroll tax and social insurance payments will ultimately come from employers, while the hikes in Customs duty on cars and boats will hammer those two sectors of the economy.

The reasons? Current account spending is again outpacing the rate of inflation and its growth is also exceeding tax revenue growth. Ms Cox is also having to juggle a lengthening capital spending list.

This year, but a likely slowdown in employment growth and heavier demands for public spending mean that Ms Cox needs to look for new sources of revenue.

If there is a significant difference between the United Bermuda Party and the PLP have a significant fiscal difference, it is here.

Ms Cox believes the economy may need a liquidity injection this year, and she believes that is best done through Government spending, thus requiring a hike in taxes to pay for it.

The UBP, as evidenced by its plan to cut payroll tax in the last election, believes that injection could best come from cutting taxes (and thus putting money in the hands of the consumer) while reducing public spending to offset the cuts.

This is a classic monetarist vs Keynesian argument, the like of which has not been seen since the 1980s. By sheer weight of votes, the Government will win it now, but it will be interesting to see how it plays out publicly.

What should be worrying Ms Cox most, though, is not this year's Budget, but next year's.

That's because Future Care, which the PLP promised would provide senior citizens with the same level of health care as people of working age, is barely factored into this year's Budget, but one way or another will weigh heavily on public finances in the future.

Nor was the promise to make public transport free included this year. Premier and Transport Minister Dr. Ewart Brown explained that work needs to be done to ensure there is sufficient capacity for the expected increase in public transport use once it does comes into effect.

The need for – and expense of – new docks, ferries and buses was not mentioned in the election campaign, but now, what was likely to be a $10 million loss of revenue from making fares free will turn out to be a much more expensive exercise.

Other projects are also likely to become more expensive as time goes on, notably free day care to qualified parents.

It is worth noting that "dree" is becoming a good deal more "qualified" now than it was in December.

Tuition at the Bermuda College will only be free to those who have graduated from Bermuda high schools and who maintain a passing grade.

And free day care will not be available to parents already receiving financial assistance from Government – presumably the same people who need it most.

It is also of some concern that Future Care will be put in the hands of a private sector provider in the next 12 months. This newspaper generally supports privatisation, but the Future Care programme, about which admittedly little is known, would appear to be ideally suited as a publicly run programme. It would not be motivated by profit, as presumably a private contractor would be, and there is little question of providing competition since there will only be one provider.

Bermuda's economy has been remarkably resilient in the last decade, shrugging off the effects of the mini-recession after September 11, 2001 with ease and the last couple of years have seen good growth in both major sectors of the economy.

But with a US recession now more or less accepted, and with election promises to keep, Ms Cox is likely to have her hands full in the next couple of years.