official has warned.

Bank of Butterfield president Mr. Michael Collier said in a letter to the bank's shareholders that Bermuda's economy is "on course for continued good recovery from a difficult few years''.

But he warned that any tax increases in the next Budget would choke it.

"With a continuation of sound Government policy and the continued efforts of Bermudians to sharpen Bermuda's competitive edge, our Island's future remains bright,'' he said. "I must also say that, for such time as our economy remains in its present convalescent state, it would be unwise in the extreme for Government, as it formulates its fiscal policy for the coming year, to consider any increased levels of taxation.

"Such increases could easily choke the still fragile economic growth which we have been so pleased to note in recent months.'' Mr. Collier also said he saw many "exciting things'' happening in Bermuda such as the refurbishment of hotels, parks and other public areas, and the re-development of "dilapidated and inefficient buildings''.

"Furthermore, we have benefited recently from a welcome airing of views on the questions of race relations and economic opportunity -- important issues with which Bermudians have shown themselves able to grapple in a mature and therapeutic fashion,'' he said.

"While no-one can expect to produce quick and easy solutions to such questions, we can at least set our course in the right direction and lay on additional sail.

"I strongly believe that these wide-ranging areas of progress testify to a dynamic and extremely fortunate community whose future promises to be brighter for all.'' Mr. Collier said the recent rapid growth of Bermuda's international business industry "has not been by accident''.

"It is the result of diligent efforts over many decades by business men and women, professional service providers and Government; indeed, by all Bermudians, directly and indirectly helping to make Bermuda the leading offshore centre that it is,'' he said.

Touching on the recent general election, Mr. Collier said it was worth noting that "we have just taken part in a continuing process of peaceful, democratic decision-making stretching back to 1620, of which Bermudians may be justifiably proud''.

"It is important for us to realise, however, that participating in our Island's decision-making is not something which is limited to casting a ballot once every several years.

"In a small community such as ours, we can all have a say in how we are governed and what directions we should take in matters both great and small,'' he said.

"Freedom of expression, the day-to-day ferment of ideas and voluntary public service are vital aspects of our democracy.

"Public decision-making should not -- and cannot -- be left entirely to MPs, Senators and paid civil servants.

"There is real scope for the ordinary citizen to become involved in working to enhance our country's well-being.

"We all have an important stake in this Island and we must therefore grasp whatever opportunities we can to work together more purposefully (and perhaps more harmoniously) than we have sometimes done in the past.''