Government did a u-turn yesterday and pulled back from implementing a hefty increase in head tax for cruise ship passengers which was announced in last year's Budget.

Finance Minister Eugene Cox said Government had listened to the concerns of the struggling cruise industry servicing the Island and come out against the hike, which was scheduled to begin this spring and which would have pushed passenger tax per head from $60 to $80.

Government will continue to meet airlines about helping them, but there was no mention in the Budget about whether a relief package offered by Transport Minister Dr. Ewart Brown after September 11, which expired in January, was being extended.

Cruise lines lobbied Government last year to freeze the passenger tax - which is already the highest in the world - or reduce it in line with islands in the Caribbean which are trying to boost the hard-hit industry.

Shipping agents on the Island and cruise lines serving Bermuda yesterday welcomed the change of heart, which they said showed Government was listening.

Mike Ronan, vice president destination development with Royal Caribbean International and Celebrity, whose company met Tourism Minister David Allen last year about the issue, told The Royal Gazette yesterday: "That's good news, very encouraging.

"I think it's in keeping with the spirit of the meetings we had in Bermuda when they said they would evaluate the situation and reach a decision that is best for all involved. It is a good partnership that has got to work for everyone."

Donald MacPherson, president of John S Darrell shipping agents, said: "I am very, very pleased at the outcome. I am glad they have seen the benefits of keeping it as it was. It shows they are cognizant of the difficulties the cruise lines are having."

Mr. Cox told MPs yesterday: "After consultation with the two main principals that service Bermuda, we have agreed not to implement an increase in 2002/03.

"In exchange, the principals have given an undertaking to use their best endeavours to achieve high occupancy levels on those ships calling at Bermuda's three ports."

Cruise ship passenger tax is forecast to generate $10.5 million in 2002/03 in line with the revised estimate for 2001/02.

Last year, Dr. Brown announced that landing fees for airlines would be deferred and the carriers would be given a rent free period at the airport until January to help them in the wake of September 11.

There was no mention in the Budget of the relief being extended, but Mr. Cox told MPs that Dr. Brown and Tourism Minister David Allen would continue meeting the airlines serving the Island.

"These meetings will help to reinforce Bermuda's commitment to the partnership and certainly show support to these airlines," said Mr. Cox.