Every day it seems brings official and unofficial reports of the mounting government shortfall and much thought will have to be given to how this deficit is going to be financed.

With a decidedly bleak picture in relation to revenue – it seems to be falling off a cliff – and limited options for cutting expenditure, the government is unquestionably caught between the so-called rock and a hard place.

The budget shortfall – probably somewhere between $100 million and $200 million, depending on who one talks to – comes on top of an already substantial public debt of half a billion dollars. To this one must add the government’s unfunded pension liability of some $200 million. The spectre of a billion-dollar debt therefore seems to have become a reality.

And with declining revenue, the usual luxury enjoyed in years past of being able to finance all expenditure, including debt service, out of current revenue is no longer going to be possible – at a time when our borrowing capacity is already pretty much “maxxed out.”

Britain will have to be approached to agree to waive the normal borrowing guidelines but such agreement is by no means a foregone conclusion. Who knows what Britain’s agenda might be in this regard and, if London’s interests do not coincide with ours, we are left in a precarious position indeed.

One could point fingers at those responsible for getting us into this position in the first place by their irresponsible disregard of the possibility that revenue could drop off, even in the face of several warnings over the last year or two, including some from this newspaper, but that is not going to solve the current dilemma.

The problem is that the government – and, by extension, the country – needs cash (and lots of it) to survive.

If a way to reduce expenditure substantially cannot be found, and increased borrowings are not permitted by Britain, the only option is to increase revenue by new or increased taxes.

One argument against increased taxes is that politicians are thereby encouraged to spend even more. However, whilst this might be a valid objection in normal times, these are far from normal times.

If ways are found to increase revenue, they will have to be spent on survival – not on political “pork”.

While the concept of income tax will be an uncomfortable subject for us to contemplate, even though other so-called tax havens, notably the Channel Islands of Jersey and Guernsey, have prospered with modest rates of personal income tax, it might be worth revisiting some previously discarded revenue measures, such as a property tax. This possibility was, in fact, floated many, many years ago by the then Financial Secretary, the late Sir Vassel Johnson.

At that time, it was shot down, not unexpectedly, by the real estate lobby and special interest players. But, in many countries, property taxes are a substantial source of revenue for local governments, financing many municipal services such as schools, emergency services and recreational facilities.

Plus, it would be a way for the country as a whole to benefit from large areas of undeveloped land, which may ultimately be sold at a very substantial profit to the landowner.

Another possibility might be a sales or value added tax at, say, a modest five percent. Whether this would be cost-effective in terms of the amount raised versus the cost of collecting and administering it, we do not know. However, it might be wrong to dismiss the concept without a proper study based upon accurate spending statistics, which we found out are apparently not readily available when we have tried in the past to research the feasibility of such a tax in the Cayman Islands.

It must be said, nevertheless, that other Caribbean countries are actively flirting with the idea of a value added tax and some have already implemented such a tax.

We have referred in the past to creative “out of the box” thinking when it comes to identifying and implementing new revenue measures but nothing was ever done in this respect to our knowledge. Now the situation has become almost beyond critical; there may be somewhat more urgency in adopting such an approach than hitherto.