Gambling could become one of Bermuda's chief sources of revenue if legislation passes stopping reinsurance companies based here from operating in the US, Premier Ewart Brown said yesterday.

He also told the BBC World Service that it was not "out of the realm of possibility" that Bermudians could have to start paying income tax.

Dr. Brown said the Island was being unfairly targeted by rich countries such as the States cracking down on so-called tax havens.

Discussing attempts by politicians in the US to close a "loophole" that allows reinsurance companies based here to operate in the US, he said Bermuda had "absolutely" been picked on.

"We believe that this is essentially an onshore problem where offshore jurisdictions are being blamed."

The Premier — in London all week for talks with British politicians — said the role of smaller, low-tax countries was misunderstood by bigger, richer nations.

"The financial activity of these companies in places like Bermuda is really beneficial to the countries onshore.

"In the US, for example, we commissioned a report which indicated there is great benefit to the United States in having companies based in Bermuda.

"These companies are sufficiently strong financially to be able to pay claims after catastrophic events like [Hurricane] Katrina or 9/11.

"There's also an impact on jobs in the US that result directly from Bermuda-based companies."

Dr. Brown said if the US attempt was successful, the Government would have to look at other ways of raising money, including the controversial idea of setting up a gambling sector.

Church groups and many Government MPs have consistently opposed gambling on the Island. Cabinet is currently considering the findings of a $300,000 study on the impact gaming would have here.

Asked by the BBC if locals might have to pay income tax in order to raise revenue, Dr. Brown replied: "I wouldn't predict it but I wouldn't take it out of the realm of possibility. We will survive. We'll do whatever we have to do."