every electronic deal. The move, however, is likely to provoke a furious reaction from companies. Deidre Stark reports Government may charge an e-commerce fee to cash in on every single transaction done in virtual Bermuda, a Cabinet Minister hinted yesterday.

And Telecommunications Minister Renee Webb said introducing the duty would allow Government to raise revenue directly from electronic transactions and so set a "precedent'' around the world.

But there are fears that such a fee could scare companies far from the Island's virtual shores where they might otherwise have easily structured their electronic deals to win tax and regulatory advantages.

A controversial push in the US to introduce such an e-commerce tax in order to win back revenue met with furious opposition and stalled after arguments that it would instead drive companies' virtual trade further away.

Ms Webb's comments at a Bermuda International Business Association meeting provided some of the first clear detail of exactly how the Island stood to profit from the e-commerce wave.

And she gave the business community a peep at how the draft Electronic Transaction Bill would work. Ms Webb said Government believed a "small service transacting fee'' rather than any kind of sales or corporate tax would most suit Bermuda.

But it was up to her newly formed E-commerce Advisory Board -- chaired by Bermuda-based technology guru James Martin -- to look at how Government could generate such revenue directly from the sector.

"We are looking at how we could introduce some kind of fee for example, whether or not it is a transaction fee as opposed to a sales tax or a corporation tax,'' the Minister disclosed.

"To see how that could possibly work and how that could be monitored, we are consulting with the private sector with respect to generating income for the Government.'' After a member of the audience asked why Government would impose such a tax which could scare off electronic merchants she replied: "I suppose the only answer of why we tax anything is because Government needs revenue.'' The Minister joined top Finance Ministry official Ifor Hughes in explaining the stage of the drafting process the draft law is in right now and Government's priorities for the push.

Mr. Hughes said the Internet economy in the US last year had created 1.2 million jobs and attracted $301 billion in extra revenue and Bermuda would only need to capture a small slice of that to reap rich rewards.

"The revenue figure compared to the size of the US economy looks fairly small but the impressive thing is the rate at which this is growing -- projected to double every nine to 12 months,'' he said.

"It's also an opportunity for Bermuda to enhance the competitiveness of companies here in Bermuda whether they be local companies or existing exempted companies.'' He said Bermuda's economy could explode with growth as a result and it would be a chance for all sections of the community to benefit. Ms Webb said for this reason a priority for the Government and the new Board was to ensure students left school with the skills necessary to compete in the "E-commerce world''.

"We are looking at how we are going to ensure that every student has a laptop computer in the classroom and every child has a computer in their home as well.

"One of the things we do not want to develop is a `have and have not situation' with those children whose parents can afford to ensure that they are computer literate the experts in this area, and the others left behind.

"We are trying to create as much as possible a level playing field with respect to educating our students and developing skills to make them able to find employment and develop their own entrepreneurial spirit.'' And this would complement the Board's other goal of creating business opportunities for all Bermudians, especially those in the community who had not benefited from the growth of the insurance industry or the like.

She also outlined how the draft law would protect and enhance Bermuda's reputation as a clean financial centre while maintaining its flexible regulatory environment through an industry code-of-conduct with "teeth''.

Breaches of that code would be offences punishable by fines or imprisonment, she said.

In this way electronic pornography and gambling merchants would not be able to set up sites based in Bermuda or trade through any of the Island's electronic malls such as EOCnet.com.

E-commerce fee She said under the proposed legislation the host of new e-commerce service providers would have to monitor their customers to make sure they were not breaking such laws.

"Pornography and gambling will not be allowed because we do want to keep Bermuda's image as clean as we can and build upon the image that we do have already internationally,'' she explained.

Catching the E-ways: Finance Ministry official Ifor Hughes explains how Bermuda will win from chasing the e-commerce dollar.

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