It is a guiding principle of taxation that it should be levied fairly and that those paying the taxes should get at least some services back in return. It is also a principle that no one sector or group of people should be taxed unduly compared to another. Those principles are easier to say than they are to apply, as Bermuda is now finding as it tries to decide to what degree international companies should be taxed.

There is a strong argument to be made for the idea that international companies and those businesses which service them are now far and away the strongest sector of the economy and should carry a greater tax burden. They have, after all, benefited from Bermuda, and should therefore give something back.

It can also be argued that some form of payroll, income or corporate tax is appropriate for international business. Bermuda has been served well by its array of consumption taxes up to now. It was a system which was particularly well suited to a tourism-based economy which sold large numbers of goods, ranging from rooms to meals to sweaters.

But as tourism declines and international business expands, consumption taxes make less sense for businesses which benefit more from capital and fees than the sale of goods to individuals. Thus there are few options beyond raising payroll taxes or increasing fees for transactions, in order to draw more revenue from the sector. The opposite argument is that one of the major reasons international companies are in Bermuda is because of the Island's low tax regime.

That, along with the Island's regulatory structure, location and infrastructure, makes Bermuda an appealing place to set up a business, as demonstrated by the recent wave of new reinsurers which formed on the Island in the wake of September 11.

Based on the comments of David Ezekiel, the chairman of the International Companies Division of the Chamber of Commerce, international companies have no difficulties paying payroll taxes or contributing to the Government coffers. But they do object to sudden and dramatic increases in their tax bills as occurred in the 2000 budget.

That in turn resulted in their expenses increasing, forcing them to pass the expenses on to their customers, thus making the Island less competitive. Overall, there is a risk that unduly taxing international businesses would force them out of the Island, thus killing the goose that laid the golden egg.

If instead the Bermuda market continued to grow because, in part, of its favourable tax regime, then revenues would rise, not because of higher taxes, but because there will be more taxpayers. At the same time, MP Trevor Moniz is right to argue that tax cuts should not necessarily be targeted at a single sector alone. Tourism-related sectors of the economy could benefit more from the stimulus that tax relief would bring, and this is also the only tangible way that Government can help to make that industry more competitive.

Again, reduced taxes could result in more visitors coming to the Island, and that could make up for any shortfall in revenue that a tax cut would incur. Finance Minister Eugene Cox has an unenviable task as he attempts to balance the competing demands of different taxpayers in a shrinking economy when demands for public services inevitably increase.

But if Bermuda decides that the best way to recover from the recession is to grow its way out, then tax breaks which help businesses to expand and not shrink may be the best way to go.