necessary in this year's budget because past Governments convinced people that income taxes were "evil''.

Senator Calvin Smith said Finance Minister Eugene Cox had to spend in the budget because he faced the "extraordinary challenge'' of trying to achieve equity across groups without the easiest method of doing so -- income tax.

Bermudians still wouldn't let you get to the word "taxation'' if you tried to even mention income taxes, he said.

Taxation was regressive as a result, Mr. Smith said about Bermuda's consumption-based tax system.

The Senator used the example of a person with an income of $50,000 and a second person with an income of $100,000 buying the same automobile. The tax burden in Bermuda is the same for each individual despite their very different income levels, he said.

"(And) if a person's income drops,'' he added. "Their tax burden stays the same. Bermudians who advocate no form of direct taxation probably never believed Bermuda would hit a point where they would suffer losses,'' he said.

And he said that was the reason many retailers are crying foul about the current system of taxation only now. In the past, he said, their income hadn't been dropping.

The Finance Minister was faced with the challenge of how to bring equity to Bermuda and to so Mr. Cox had to "spend more on the people'', he said.

"This is what the last Government successfully convinced Bermudians. `This is where you should be because the other form of taxation is evil,''' he said.

But under the PLP the budget is now addressing issues of the less fortunate in Bermuda, he said, such as the elderly and the poor.

"This Government cared very, very much about what was going on and couldn't do anything like try taxing the rich and giving to the poor,'' he said, so Government made sure spending addressed redistribution.

And Mr. Smith said that education was clearly in need of expenditure to address the neglect of 30 years of UBP Government.

He said, despite the fact that it was clear in the 1960s and 1970s to those that ran Bermuda that international business was coming, education policies of the time stressed trade schools rather than strong academic programmes.

The Senator said that young, black women went into the academic programmes thinking that they would be helping out the young, black men who entered trade programmes.

`Don't blame us for Budget spending rise' "(But) when the shift came, the black male got left behind,'' he said.

The result has been a huge demographic of black males that can not be ignored and must be brought into the economy immediately, he said. "They can't compete unless they get the education and the training,'' he said. "The Minister has no option but to make sure this neglect is corrected and corrected in this budget as best he can.'' Mr. Smith said that Shadow Finance Minister Dr. Grant Gibbons only objected "when the Bermuda Government tries to make up for the defects and deficiencies of the past''.

He also said that worrying about the US economy going into a long period of recession was pointless because "if it goes on and on, baby, Bermuda's going to be done anyway''.

Rather, he said, Bermuda should assume the US economy is going to pick up. He said that given decreasing interest rates introduced by the Federal Reserve and President Bush lowering taxes, the chances of the American economy going into recession were slim. Meanwhile, "there's a lot of catching up to do in Bermuda,'' he said. "And Government is doing it by putting expenditure where the need is greatest.'' Mr. Smith also took on arguments made earlier by Independent Senator Jeannette Cannonier that Social Assistance should be targeted to training. He said that assumes that everyone is trainable. Some people may not be trainable for various reasons he argued. And he said that he thought roughly 87 percent of those not working or who seem to be unemployed "are either already in a pretty good drug business or incapable.''