and replaced with a British-style value added tax or a sales tax similar to those levied in the United States.

But Finance Minister the Hon. David Saul said it was the wrong time to look at the proposal.

Government policy remains that Customs duties remain the fairest way to collect revenue, and Dr. Saul said retailers were only now recovering from the recession.

Island Press chairman and City retailer Mr. Warren Brown said yesterday that it was time the Country looked at another way of raising public revenue.

He warned that Bermuda would soon face major economic problems otherwise.

Retailers and the Chamber of Commerce have been increasingly coviferous about the need to reduce Customs duties in order to make the Island's goods more competitive.

In addressing customs duties as a revenue raiser, Mr. Brown said: "What is happening around the world is that other duty structures are coming down. For example, a sailboat taken into the United States used to be 25 percent duty.

It is now three percent and in another three years the duty is going to disappear entirely.

"It's the same thing with cashmere sweaters, which are now cheaper in the US than they are in Bermuda because of the reduction in duties. The US is not the only country, but as duties come down around the world, our prices correspondingly are higher, higher and higher compared to those other countries.

"Today, that is no longer acceptable because we are putting a very high price tag on what we are selling. We are going to have to take another look at a way of collecting a consumption tax.

"I'm completely in agreement with (Dr.) David Saul, in the fact that we want to have a balanced budget. So without Customs duties, we have to find a way to raise the money to run Government.

"We need a type of taxation that is going to spread the taxation system around the whole Island, and not just in a certain quarter, otherwise you are not going to have any shops left in Bermuda and the tourist trade is going to continue to erode.'' Mr. Brown stated: "It should be a consumption tax and should be based at the sales end, or product end. A type of sales tax or value added taxes.

"For example, if you are selling a water tour you might have to also collect a three and a half percent tax. It could be on anything, even a ticket to the theatre.

"That spreads it throughout the whole community and I think that would be a fairer way to do it. And I think the prices will go down in Bermuda.'' But Dr. Saul said VAT was not appropriate to a non-manufacturing country.

"Retail sales are coming out of the doldrums and coming back,'' he said.

"Retailers are looking backwards at four years of suffering and would like to make it all back.

"We are seeing an improvement in the economy and we think we should wait a year or two to see exactly what happens.

"I don't know anyone who would pursue value added tax. A value added tax is not appropriate for a non-manufacturing country that just sells services. They only work in a manufacturing country.

"We are most concerned about pricing in Bermuda and the cost to the tourist.

We have worked out at the Ministry of Finance that if you introduce a sales tax of six percent that the item would become more expensive than it is now.

"Customs tariffs are a much more efficient and a cheaper way of collecting revenue for Government.'' Dr. Saul said that even at six percent, the Government would still fail to reach the revenue raising potential of the current system and would find their income reduced.

He said: "A six percent sales tax would be inefficient. That we would not make the money we do now, is not our argument. Our whole reason for looking at this was to keep Bermuda competitive so that the prices are kept as low as they can.

"Further, a sales tax would be a nightmare for little businesses. And 70 percent of the Island's businesses are small businesses. They are not geared up for that kind of record keeping. They just do not keep their books that way. It would crucify them and add to the overhead of the shops.''