Customs duties are working against the Island's ability to compete with other destinations and with the United States, outgoing Chamber of Commerce president Mr. Thomas Dickinson said yesterday.

Mr. Dickinson, speaking at the Chamber's annual general meeting, called for a reduction in the duties to allow retail businesses to become more competitive.

But he rejected income tax as an alternative revenue raiser.

Mr. Dickinson, who will be replaced as Chamber president by banker Mr. Louis Mowbray, said Bermuda's problems would not end with the recession.

"The malaise is much deeper than that and is internally driven,'' he said.

"Professor Don Hawkins of George Washington University and the Bermuda College is an expert in the field of tourism.

"He explained ... that in his opinion, notwithstanding the recession, the decline in Bermuda's tourism over the last five years is a direct result of the lowering of the quality of the product and more importantly, the quality of service.'' Noting Government was now reviewing tourism, international business and sales, he said the latter was a "particularly weak part of the problem triangle'' due to lack of competitiveness, customs duties and poorly trained staff.

"The long decline over the years of general profitability of a retail store has finally been accepted as fact, not due to one factor but as mentioned above to a number of them,'' he said.

"The cost of operation today is no longer acceptable by standard business practices. The high cost of operating a business today is interrelated to the declines in profits in recent years.

"Back out from your expenditures the cost factor directly related to Government -- taxes/duties etc. -- and you will get a profound shock.

"I now will put my head on the chopping block and say that our duties structure, which has worked so wonderfully for us for so many years is now working against us.

"There was a time when this was the major source of revenue for Government.

Today it accounts for less than 40 percent. With the dropping of duties around the world, begun as a result of the Kennedy round of tariffs in the '60s, we have become less and less competitive, particularly vis a vis the United States.'' He said he opposed substituting the revenue with income tax.

Mr. Dickinson also urged Government to take up the option to introduce a new cruise ship in 1994 before the May 1 deadline and said: "We recognise there will be concern in some places should Government take up the option, but it must be clear to all that an option is only what it states to be, an option only.

"Government may decide later not to implement the option, however acceptance of it now will bring some badly needed flexibility into the decision-making process.'' And he also called on trade unions to "accept that profit in business is a joint responsibility of both union and management.'' "The days of union members dancing on tables in front of hotel guests will no longer be tolerated by the general public of Bermuda.

"I challenge the Bermuda Industrial Union to step out of their 1960s mold of confrontation and for the first time become a positive factor in our small society working towards the general well being of all Bermudians. Without change, our economic miracle cannot be sustained.'' PASSING THE MANTLE -- Outgoing Chamber of Commerce president Mr. Thomas Dickinson (left) handed over the reins to new president Mr. Louis Mowbray yesterday at the business group's annual general meeting.