prices in return for tax cuts.

Yesterday Finance Minister Grant Gibbons bowed to calls for change, announcing a series of cuts in Customs duties on some tourist-related products.

However he made it plain he expects retailers to play their part saying: "It is important that prices are correspondingly lowered on all goods in order to generate improved sales performance.'' The cuts in duty were one of a range of measures announced in yesterday's budget aiming to help tourism, the hotel industry and the Island's businesses.

They received a warm welcome from small businesses, the Chamber of Commerce and hoteliers -- although Shadow Tourism Minister David Allen said they failed to give the jump-start the tourist industry badly needed.

Yesterday Dr. Gibbons said $500,000 would be given to Tourism for work with the US-based Monitor Group which will examine the tourist industry in Bermuda.

Hotels will get a tax break -- paying just five percent duty on materials needed to put up new buildings, or new hotels as the Hotel Refurbishment Act is extended.

No new taxes will be placed on the industry and tour boat operators will receive huge reductions in duty to encourage investment in new equipment and vessels.

New boats for tours or diving will have a ten percent duty and duty for fittings will come down to 33.5 percent.

Duty on leather goods will come down from 22.25 percent to 6.5 percent which will be the rate for glassware, statuettes, ceramic articles and real and imitation jewellery.

Natural fibre clothing duty falls to just 2.5 percent and the duty on art works decreases to 8.5 percent. Overall, Government will lose $1.2 million annually in income.

No new taxes will burden the industry and existing taxes are not being increased.

"Government's role as a partner and facilitator to enhance tourism's competitiveness is clearly demonstrated in this budget,'' said Dr. Gibbons.

"No new taxation is being imposed on the industry, the Hotel Refurbishment Act is being broadened and duties in key areas are being reduced, in some cases very significantly.

"At the same time, a broad strategic examination of the industry is underway, supported financially by this budget and implemented through a partnership between this Government and the private sector.'' Last night David Rowntree, president of the Chamber of Commerce congratulated the Dr. Gibbons on the budget.

"We are talking about a reduction in duties on some retail items and for tour boat operators. On those two key issues the Budget goes a long way.

"Now the retailers have to respond. If Government takes the initiative to lower the cost of doing business it is something retailers have to react to,'' said Mr. Rowntree. "Time will tell. Certainly it is something that the Chamber looks forward to seeing.'' Any price drops will take time to filter through as old stock charged at higher duties will have to be sold first.

"Once they are sold, replacements will come in that have less duty and they could arrive in time for the new tourist season,'' said Mr. Rowntree.

David Durham, owner of Bermuda Longtail , said he was delighted by the tax incentives for the tour boat industry.

"I'm going to have a party. I think it will open up a whole new industry,'' he said.

He said he could possibly save about $20,000 before this season opens because of the reduction in duty on fittings.

"It could help to bring new people and new ideas into the industry. A lot of the fleet is old and there is nothing fresh on the waterfront. I can see my company trying to bring something in,'' he added.

Hotels also welcomed the initiatives with John Harvey, the executive director of the Bermuda Hotel Association, saying the Budget contained some very good news.

"It is very good news. The reduction in duty for materials is a good incentive. I hope it is not too late and I hope it is not just relief for a certain period of time.

`On the face of it, it seems to be encouraging and a step in the right direction.'' Small businesses were also encouraged by the Minister's announcement and although aimed primarily at big tourist businesses, believed the whole Island could benefit from the budget.

Michelle Khaldun, general manager of the Bermuda Small Business Development Corporation, said Customs duty cuts would be a relief for a number of retailers.

"That is favourable for retailers. Small business will benefit as a result of the decrease in tariffs and there could be a trickle down effect with benefits to larger businesses being passed on to the small shops,'' she said.

Sonia Dismont, of Dismont Robinson, added: "Every year we watch for the tariffs on wines and spirits, so we were pleased to hear that they had not gone up. Overall we were quite pleased.

"It didn't help us, but it didn't hurt us, so in that respect we are quite pleased. We are no worse off.'' Tourism's budget increases by just over $400,000 to $31.7 million and Minister David Dodwell said he was happy with the increase.

"The most pleasing fact in the budget is the emphasis towards tourism, particularly in regard to relationships with the private sector, such as the Monitor Group,'' said Mr. Dodwell.

He said the Group will be looking at two areas -- how to become more competitive and a review of the tourism market place.

Mr. Dodwell added: "I am very much in favour of a reduction in duty and I am looking at developing water-based tourism.

"I am aware of the need to update boating equipment that is here and this is a major step in the right direction.

"The challenge is there, but the challenge is also there for Government and the private sector to work more closely together. The Government will never do it alone.'' But Shadow Tourism Minister David Allen said the Budget did not go far enough.

"I think the biggest disappointment is that they have not provided the innovative jump start the tourism industry needs and the economy requires.

"It does not increase the hotels' tax burden but that is against a backdrop of years of considerable increases which they have suffered.

"There could have been more relief for hotels, for instance the occupancy tax could have been altered, but that has not happened.'' Mr. Allen said another concern was that tourism's budget had not kept pace with the increases in marketing and advertising costs.