Finance Minister Paula Cox delivers her first Budget today and there is every reason to believe that it will be tougher than those of recent years.

Indeed, her late father, Eugene Cox, delivered two "election budgets" in a row, which served their purpose, but have left Government finances with current account surpluses that are too narrow for comfort.

Mr. Cox was fortunate in earlier years that capital projects did not proceed as quickly as planned, thus putting off the need to borrow. Consistently underestimating how much money would be raised through payroll tax also helped the Government, albeit unintentionally.

At the same time, an economy that was growing, albeit slowly, kept Government finances reasonably ? but only reasonably ? strong.

That is unlikely to be the case this year.

It is a reasonable bet that borrowing will have increased in the last year as major work was done on the Berkeley Institute and other capital projects. Yesterday's pre-Budget announcement that a further $13 million must be allocated to Berkeley all but guarantees that and raises serious questions about the Government's ability to manage projects of this scale.

Paying for uninsured damage from Hurricane Fabian will also have added significantly to Government's expenditure estimates.

Money to fund generous pay increases for Police, blue collar workers and and civil servants also has to be found, while the overall Government workforce has probably expanded again, if past practice is anything to go by.

It is not all bad news, however. Fabian, perversely, will have boosted Customs duty revenues as additional construction goods were imported to the Island. That will be partly offset by a slump in tourism-related taxes in the wake of the hurricane ? on top of what was shaping up to be a pretty poor year anyway.

Aside from that, it is likely that income from international business will have increased slightly due to expanded hiring. Income from new incorporations will slip.

All of that sets the stage for Ms Cox to raise taxes. It is likely that many of the increases will come on consumption taxes. Increases in "sin taxes" on cigarettes and alcohol are long overdue.

Land tax, which is currently discounted to 60 percent of the Government's estimate of the true value, will probably increase after being held down for two years. Inflation-linked increases on a vast range of Government fees are also likely.

The late Mr. Cox's decision not to raise some of these taxes slightly in the last two Budgets could make these increases quite unpalatable; that is the price of playing politics. If this Budget does see heavy tax increases, it will be part of a gamble that it is better to give voters a tough budget at the start of a Government's five-year term rather than at the end.

Whether retailers and other tourism-related businesses will get any further Customs Duty relief is debatable; it will also be interesting to see if Ms Cox will extend the duty relief for hotels and restaurants for renovations.

The greater test for Ms Cox will be to see if she can impose more discipline on Government spending, which has outpaced Government revenue by 18 percent over the last decade.

Government is committed to increasing pensions. But the biggest drain on Government spending has been on wages and salaries. The PLP has increased the number of people on government's payroll by ten percent since 1998, with no particular improvement in service or efficiency.

Imposing some fiscal discipline on Government services will be absolutely key, if only because it would be extraordinarily unfair if the burden of re-establishing bigger surpluses fell solely on the taxpayer.