More than any other time in recent history, Bermuda needs another source of revenue, one that will help struggling restaurants and retailers, create jobs at the lower end of the economy, and increase revenue and donations for our struggling charities, churches and clubs. One solution: residential tourism.Residential tourism was the original foundation upon which Bermuda’s tourism industry was built. Wealthy Americans and other foreigners bought mansions on our Island where they lived throughout the autumn and winter months, greatly adding to Bermuda’s economy.Unfortunately, with the invention of air conditioning that increased the attractiveness of other warm destinations, and with the much improved efficiencies in air travel over the last 40 years, wealthy foreigners now frequent many other destinations and no longer spend five or six months each year in Bermuda. As a result, Bermuda now has, throughout the Island and particularly in Tucker’s Town and Tucker’s Point, many large houses that remain empty for all but a couple weeks a year, adding very little to the Bermuda economy.When you consider the limited amount of land in Bermuda and the little value these vacant homes add to our economy, it becomes clear that this is an inefficient and wasteful use of Bermuda’s land.So how do we convince rich foreigners to live full time in the Bermuda houses they now own? And how do we better ensure that future buyers of these homes will more likely live here year round? The answer is found in Bermuda’s tax structure.Bermuda has four general sources of tax revenue: customs duty, payroll tax, land tax and capital tax (the annual fees paid by companies), the first three of which are paid by individuals.Most Bermudians and expatriate residents pay land tax (either directly or through rent), payroll tax (in some cases paid by their employer) and customs duty. But one group of individuals part-time resident homeowners pay land tax and almost no other tax. In particular, they pay only a very limited amount of customs duty because they are rarely here. Not only is this an inefficient means of raising tax revenue, it is inherently unfair rich foreigners paying a relatively small amount of tax, yet using up such a large amount of valuable land.Take, for example, two homeowners in Tucker's Town. One lives here all year round. He eats at the local restaurants, he shops at the local grocery stores, he fills his prescriptions at the local pharmacy, he buys gas at the local station, and he purchases clothes and other personal items at the local retail stores. These purchases not only create jobs for Bermudians, but they also indirectly pay the customs duty that increases Government revenue. Further, this full-time resident is more likely to join our clubs and churches and make donations to our charities. In other words, he is the perfect residential tourist.The other homeowner the rich jet setter that comes to Bermuda for only a few weeks a year is simply not present to frequent our restaurants, shops, churches and clubs, and because he and his family have a weaker connection to Bermuda, they are less likely to donate time and money to our charities. In other words, compared to the full-time resident, he does little to support our economy and he contributes much less to our Government’s tax revenue. He is a less desirable residential tourist.There is a simple fix to this disparity that will also help solve the problem of inefficient use of land owned by absentee foreigners. As other countries have done, Bermuda can implement an additional land tax levy (eg 50 percent more) on those homeowners who live outside of the country for more than, say, six months of the year. In this way, homeowners who are not here to pay customs duty (yet are using up valuable land with houses that lay vacant all year) will now be contributing a more equitable share to the tax base. (Note: rental properties and lower ARV properties will be exempt from this vacancy tax.)So what will the absentee rich homeowner do? He will do one of three things. He will either(i) live here for at least six months of the year and thereby bring more business to local restaurants, grocery stores, pharmacies and retail stores, more customs duty to government, and more foreign currency to support the Bermuda dollar,(ii) continue to only spend a few weeks a year here and pay the higher land tax, which provides government with more revenue and foreign currency or(iii) sell his house to someone who will either live here for more than six months of the year or pay the higher land tax.Will realtors like this idea? Probably not. It may lower property values at the highest end of the market. While that would result in slightly lower commissions for realtors, it would also make these large houses even more attractive to rich buyers intending to become full-time residents. And that would be good news for our local shops, restaurants, clubs, churches and charities that need all the help we can give them in these difficult times.