In the past 10 days, the two pre-eminent political leaders of Bermuda have stated that the introduction of income and corporation tax might be on the table. The reported comments of Premier Dr. Ewart Brown and Minister of Finance Paula Cox follow. Neither has taken exception to the reports.

Asked by the BBC if locals might have to pay income tax in order to raise revenue, Dr. Brown apparently replied: "I wouldn't predict it but I wouldn't take it out of the realm of possibility."

Ms Cox's statement was more curious. She was quoted as saying: "There is now a strong suspicion that the G20 has an undisclosed agenda item to drive forward a global corporate tax policy, which may fly in the face of a nation's sovereign right to set down its own tax policy."

This was merely a suspicion, with Ms Cox said, adding: "There has been no indication to the Ministry of Finance that on domestic economic policy the UK, as the administering power, will interfere in how we set domestic tax policy."

These statements came just weeks after Britain refused to sanction the Cayman Islands borrowing from a willing cluster of banks, since the proposed loans would raise Cayman's outstanding debt beyond the level that Britain considers desirable (Britain's borrowing level is, in percentage terms, several times higher than Cayman's would be, had the loans been approved). Britain suggested to Cayman that it introduce taxes on real estate or income.

I am in the camp that vehemently opposes income tax. Others believe that an income tax would be Bermuda's best bet. Of those in favour, Rolfe Commissiong has been the most vocal. To add two voices from my side of the divide: Albert Einstein said that the income tax was the one thing he could not understand. Professor Lasser, who invented a famous curve used in economics, said that no greater anti-motivational tool had ever been invented. I have paraphrased what both men said, but the gist of each is correct.

It is not my intention to debate the pros and cons today. If Ms Cox is right, no one's views will matter, other than those of the men and women who run the G20.

First, I must ask: how would "a global corporate tax policy" be carried out? Would Ireland's 12.5 percent corporate tax rate be used? Or would the much higher rates in force elsewhere apply? Would Hawaii and Vermont have to close their captive operations? (One assumes they would.)

Would the Saudis be forced to impose corporation tax, and how on earth might that be achieved? The country is a feudal domain: no one tells the King what to do. What of Iraq, North Korea, Myanmar and others, who have failed to introduce the most basic freedoms? Would they be strong-armed into compliance? Obviously not.

And what would it mean for Bermuda?

Let's start with income tax. Dr. Brown allied his comments to a potentially bad outcome for Bermuda from the efforts of the movement in the US, led by domestic insurance companies, to tax insurance companies doing business in the US at essentially the same rate as US companies, regardless of their domicile. This newspaper reported: "Dr. Brown said if the US attempt was successful, the Government would have to look at other ways of raising money..."

He's right. The loss of the insurance and reinsurance companies would punch a hole in the Government's already-weakened Budget. The introduction of income tax that might have to follow such a body-blow would likely cause some people to leave Bermuda, further weakening Government revenues. Income tax would increase the cost of living here, which is already high. Anyone who could work anywhere else would be better off to do so - economically. You can rent a three-bedroomed house in other countries for a great deal less than $10,000 a month.

Government would need many more civil servants to collect an income tax and/or a corporation tax - and perhaps a capital gains tax and a gift tax and all the other taxes that other countries charge their citizens. A greater number of civil servants would reduce unemployment among those left behind by the insurance companies, but raise the rate at which taxes needed to be levied.

No one can say with certainty what the introduction of taxes would do in Bermuda. I suspect that the richest people here have anticipated this moment, and that the burden of an income tax would fall most heavily on those unable to arrange their affairs so as to defeat the taxman. That means workers, blue-collar and white.

The OECD spoke dreamily of "tax harmonisation" 10 years ago, but the idea rightly sank without trace. It disappeared, in no small part because any democratically elected US President takes just as unkindly to being told what to do as does the King of Saudi Arabia.

Ms Cox is thus not the first person in the world to speak of tax conspiracies, but she is the first sensible person to do so. Given her high position and intimate knowledge of the ways of the financial world, hers is the more worrying statement. I suspect that she spoke more as a citizen than as a Minister, or rather, I hope that to be the case.

For if she's right, and sovereignty no longer means anything, we will have entered the most awful of all possible worlds: a totalitarian global regime, led by countries with the worst record of financial management, dictating to better-run countries how to drag themselves into the financial mire.

* * *

Follow-up: A reader was kind enough to send this update on why Toronto's old subway tokens are no longer valid:

"I found out why your old (public transport) tokens weren't good in Toronto. I was told that that the reason the old tokens were replaced is that city workers were counterfeiting them in huge numbers and selling them on the black market. This was the reason that the older tickets had been abandoned previously, but the enterprising city employees found a way to counterfeit the tokens as well. Locals were given a timeframe in which to exchange their old tokens for new, but the occasional visitor wouldn't have known about that. It's amazing that city workers, who are usually not very productive, can be so industrious when it comes to gaining ill-gotten gains!"

I am aghast. I thought everyone in Canada was nice, but it turns out that Toronto's transit workers are racketeering goons, who have cost me $4. My Canadian lawyer (a cousin) advises me to sue, but I have decided to swallow the loss with equanimity, which is not how I would react were income tax to be introduced.