A spokesman for international businesses on the Island yesterday warned of the detrimental effect increasing the cost of doing business in Bermuda could have.

Bermuda International Business Association Chairman Raymond Medeiros issued the caution on the heels of the Budget Statement from Finance Minister Eugene Cox.

While characterising the Budget as "generally sensible'', Mr. Medeiros sounded a note of caution with respect to controlling capital expenditure to avoid any further, unforeseen short-term increases (in) direct taxation, both to businesses and consumers.

He acknowledged that the Finance Minister faced a difficult task in trying to reconcile support for programmes linked to the social development of the Island with support for the business sector.

"We recognise the social agenda of the Government and are pleased to see that they in turn recognise the value of the business sector in ultimately helping them, to support that cause,'' he said.

The Budget did not penalise the business sector unfairly, he continued.

"The increase in the schedule of Government fees from companies is sensibly in line with inflation and not totally unexpected given that there has not been an increase in two years.'' And BIBA was pleased that it continued to be acknowledged with substantial funding from the Government, even though it was affected by the overall reduction of five percent made to all public budgets, said Mr. Medeiros.

But this cut in funding would affect the size and scope of the programmes conducted by the organisation, he noted.

"As the Minister himself acknowledged, it is important that as a jurisdiction we do not lose ground in terms of our profile in overseas markets,'' he said.

"Now more than ever Bermuda has to invest in staying competitive, right across the board, in our marketing efforts, as well as the products, services and business environment we provide.'' Turning to the tax increases for businesses in the Budget, Mr. Medeiros noted that they came at a critical time in Bermuda's competitive environment.

"Government must always be mindful of how these types of increases affect the cost of doing business in Bermuda,'' he said.

"Companies have to find ways to cover these increases that may affect the overall value Bermuda provides as a jurisdiction and potential new entrants have to assess Bermuda as a domicile based in part on those costs.'' Shadow Finance Minister Grant Gibbons agreed.

"The increases here are not outrageous but they still increase the cost of doing business in Bermuda which will have a negative affect,'' he said.