Business chiefs have given a mixed reaction to the 2008 budget, questioning the significant rises in taxation for companies and duties paid on vehicles.

Increases in stamp duties on properties and licence fees for properties also weighed heavy on real estate agents' minds, but there was some more welcome news for retailers, who will get duty relief on materials brought in for renovations.

Among some of the key issues affecting international companies and local businesses alike are a 0.5-percent increase in payroll tax, a 6.75-percent rise in social insurance contributions for employers and an company fee increase of 6.5 percent, effective from April 1.

Philip Barnett, president of the Chamber of Commerce, said he was wary of the payroll tax increase and the impact it would have, particularly on international business domiciled on the Island.

"No tax increase is a good increase, quite frankly," he said.

"I think, as I have said from the beginning, as much as people make great focus on the fact that Bermuda is a tax-free domicile, the fact of the matter is that it is a very expensive place to do business in.

"I am concerned that it will have an effect mostly on large international companies — 0.5 percent is a significant amount of money to companies that are domiciled in Bermuda.

"It is just one more thing that may take Bermuda's desirability down a notch."

Meanwhile, the existing tiered rate of duty on cars will stay at 75 percent and 150 percent, but the threshold that separates the two rates will be cut from $12,000 to $10,000 and Government plans to increase the rate of duty from 33.5 percent to 55 percent on pleasure craft, including motor boats and sailboats, in a bid to raise more revenue.

HWP president and CEO Jonathan Brewin admitted that the reduction in threshold level for car duties would force the industry as a whole to look closely at the way it does business in Bermuda in the future.

"It is a treble whammy really because we are getting hit with price increases, the effect of the weakened dollar, which affects the countries we do business with, and duty increases all at the same time," he said.

Stamp duties for properties selling for more than $1 million will also go up by one percent, while it will be more expensive for foreigners to buy properties as licence fees will rise from 22 percent to 25 percent for houses and from 15 percent to 18 percent for condominiums.

Mr. Barnett was concerned with the value for money the Budget offers business in Bermuda.

"It almost takes your breath away for Bermudians to say a '$1.1 billion budget' — that is a very large amount for a very tiny island and what we simply have to point towards is 'Are we getting more bang for our buck?' and it will obviously take a little while to answer," he said.

"The civil service and the cost of running it seems to spiral upwards and many Bermudians ask, 'Are we getting more bang from our buck?', and as a business organisation, as the Chamber of Commerce is, we ask, 'Will it improve services and is it worth spending money?'

"As I have said before, if you took just 500 jobs in the civil service and allowed those people to return to the private sector, where they are desperately needed, that would only end up accounting for five percent of the current work permits that are out there, but it could have wide-reaching implications for housing stock and the rush hour and grid lock on the roads.

"The question is — 'How do you curb costs and ensure that Bermuda is booming and a lot of things are going better?' — we really need to make sure that we get more bang from our buck."

But, he was, equally pleased to see Government make pledges to help improve care and eduction, in addition to making retailers lives easier through a relaxations of duties on material used to renovate their premises.

"Obviously we have some positives to see in regards to the care programme and in regards to the educational component allowing for free tuition for those who want to study at Bermuda College — the Chamber of Commerce believes that education is the only way forward," he said.

"I am also really delighted about retailers getting duty relief on materials brought in for renovations.

"I think that this is such a key thing that can help small businesses, which are run by couples and Bermudians — it is a Bermudian-concentric side our economy that really deserved it.

"It is going to really revitalise that sector and allow Bermuda to get back into that competitive arena."