A recent Wall Street Journal article highlighted how Finland, which is 70 percent dependent on forestry exports, has figured out a way to remain competitive during economic downturns - a flexible payroll tax regime.

Being so dependent on the forestry industry previously resulted in major economic shocks and unemployment for Finland when the global economy turned down. In order to moderate these shocks, Finland developed a flexible payroll tax regime which raises payroll tax during good times and lowers them during tough times-the excess collected during good times reserved for use by the government during tough times. The objective of such a flexible approach is to effectively lower export pricing and hence increase export competitiveness so as to stabilize employment when times are tough.

Bermuda's situation is similar to Finland's in that we are heavily reliant on the international business sector. Bermuda's most dominant source of income is the provision of intellectual and administrative services to the international business sector, including insurance, fund administration, trust and wealth management services.

Business leaders have argued that the recent rise in payroll tax has made Bermuda less competitive as a jurisdiction from which to provide such services.

The Bermuda Government has been flexible with respect to payroll tax breaks to the hospitality industry; however, this is of marginal benefit to the overall economy as it has almost no impact on the competitiveness of the international business sector-the primary revenue generator for the Bermuda economy - and 2009 employment data shows a marked decline in international sector employment.

Compounding Bermuda's difficulties in the internationCompounding Bermuda's difficulties in the international sector has been Bermuda's ill-conceived term limit policy which, despite being recently relaxed-has resulted in the migration of intellectual capital and business relationships to other jurisdictions. As intellectual capital settles into lower cost jurisdictions, it is unlikely to come back to Bermuda.

At least Finland will always have its forests.