The protests centre around the breach of the tradition that employees and employers pay equal shares of the levy.

The reason for the change, according to the Budget Statement, is that businesses are still recovering from the recession and in order to maintain employment and return to profit, they cannot afford any additional costs.

Secondly, the reduction in overall employment since the late 1980s means that revenues from hospital levy have fallen and the rate must be increased to account for the shortfall.

On the face of it, this is reasonable and right. Businesses -- particularly large employers -- were hard-hit in the recession and most worked hard to keep their staff at work, even when it was unwise to do so from a business standpoint.

And Government has to pay for the programmes the Country needs, including those which were put on hold when Bermuda was in the depths of the recession.

But increasing the hospital levy and giving businesses the option of passing on the cost could prove to be counter-productive.

Opposition Senate Leader and union official Sen. Milton Scott has warned the increase will be the first demand on any contracts which come up for renegotiation. This will put those employers who choose to pass the full increase on to their workers in an unenviable position. If they do agree to increase wages to cover the cost, it will increase their wage bill and will cancel out the benefits of the move.

If they refuse to increase wages to take account of it, it will lead to increasingly fractious negotiations and raise the risk of industrial unrest.

The tax is no better for those employers who -- at the request of Government -- choose to continue to pay their share.

Those companies in competitive sectors of the economy will be placed at a disadvantage because their costs will be higher than their rivals, at least in the short term.

Monopolies like Belco and Telco, which have already said they are not passing on the increase, will have to find the money somewhere. The likely place is the consumer, who will pay through increased rates.

It is also confusing why the levy is being increased at all. It is not a set fee, like car licences, which has to be increased periodically to keep pace with inflation. It is a tax based on the percentage of income. As wages and salaries increase, so do hospital levy revenues.

By increasing the hospital levy rate, inflation will be pushed up and employment discouraged.

Employers will be discouraged from taking on extra staff -- which in the long run would have brought revenues from hospital levy back to their old levels.

This move, in an otherwise sensible and prudent Budget, should be looked at again.