Gibbons delivered yesterday was either a powerful demonstration of the strength of the Bermuda economy or an out-and-out election budget. The truth probably falls somewhere in between.

Last year, Government earned more money through tax revenues than it had projected as the economy performed above expectations and at the same time it managed to keep a tight rein on expenses, meaning it ended the year with a greater surplus than originally thought.

Because it expects the economy to grow at about the same two percent rate as last year, and as spending is not increasing markedly, those tax increases which are contained in the Budget are not onerous. Vehicle licences and ferry and bus fares are being increased by five percent, but it should be recalled that they were not raised last year. Few other taxes are being raised at all and that should go some way to helping the economy to grow.

Spending too is generally being held to low levels apart from necessary expenditures on continuing to strengthen the Police and upgrading of the schools. One area where spending is rising dramatically is in health care and care for the elderly. Government has made some commitments in the Budget to improving pensions and to look at health care. While care for the elderly does not yet pose a major financial burden on Government, it is growing steadily and will become an increasingly large problem which will have to be dealt with.

In some ways, this Budget is notable for what it does not contain as for what it does. Retailers and hoteliers may well be unhappy that there have been no significant reductions in Customs duties, or any serious changes in the structure of the tax system. While taxes have not been raised within the tourism industry and the duty rebate for hotel refurbishment has been extended, hoteliers could argue that too little has been done to restore the industry to health.

But Government's approach to tourism fits the general tenor of the Budget. The overriding theme is that "there is a limit to what Government can accomplish alone, there are limits to how much revenue it can raise and there are limits to spending. Increasingly, success comes when Government works as a facilitator, creating a framework in which other groups can be successful, or when it creates partnerships with other institutions and businesses.'' What's being said is that Government should not be seen as the solution to all the Island's problems. It is prepared to work with members of the community -- whether that means hoteliers, retailers or international business -- to create an environment in which they can compete, but it is not going to do their work for them. Thus Government has committed half a million dollars to the Monitor Group which is looking at tourism, but makes it clear that it is not going to cut taxes to assist one part of the economy if it would risk damaging the whole.

In that sense, this is an election Budget because it sets out the United Bermuda Party's philosophy of government, and it will probably lead to much debate within the House of Assembly and perhaps on the campaign trail.

For the Country as a whole, this is a gentle Budget, and it is to be hoped that this year's restraint on taxes are not a harbinger for a tough Budget in 12 months.