be slashed in today's Budget, while retailers want Government to deliver on its election pledge of introducing duty-free shopping.

Struggling retailers say duty-free shopping would stimulate tourism by allowing Island stores to compete on price with the US.

In a budget heavily weighted toward social needs last year, Government current account spending rose by $17.66 million to $529 million and borrowing was $28 million.

With a slowdown signalled in the US economy which could have an impact on the Island, the United Bermuda Party is warning against increased borrowing which will be expensive to service.

The Chamber of Commerce believes the huge growth in international business in the past year should provide Finance Minister Eugene Cox with enough extra revenue to cover new spending without increasing taxes much.

More than 1,000 new companies registered on the Island last year and the Chamber feels the extra incorporation and company fees should provide Mr. Cox with plenty of cash for spending.

Chamber of Commerce international companies division chairman David Ezekiel said yesterday: "Other than in payroll tax, we are hoping in general for very little change.

"We realise that with the decline in tourism there may be additional taxes to find elsewhere but we are hoping the increase in volume of business should take care of that without any real changes to the rates themselves.

"Incorporations are at a record level and continue to increase. There were more than 1,000 new companies incorporated and even with natural attrition there is still substantial growth.

"We all know the international sector is doing well, and one interesting aspect is the breadth. The burden is not just insurance, it is also investment and e-commerce.

"Especially if that results in increased activity in the physical presence side, which is the main contributor, we should see significant growth.'' Exempt companies have been lobbying Government to reduce changes to payroll tax introduced in the last Budget which brought them into line with local businesses in response to Organisation for Economic Co-operation and Development (OECD) concerns.

International companies previously gave an assumed salary figure for employees, but Government changes in the last Budget mean they now have to give actual salaries up to a cap of $250,000.

Editorial, Page 4 Give us a Budget break Payroll bills rocketed by as much as 100 percent for some exempt companies after the changes.

Mr. Ezekiel said the Chamber was looking for a reduction in the cap, but would not give a figure.

"The change in the cap for payroll tax had a significant impact on international business,'' he said.

"It is fair to say we are expecting a reduction but we will have to wait and see to what extent, and if there is a reduction, what it is and what is the explanation.

"We've provided the Minister with the information, but it is totally his decision and we are not privy to the decision.

"We have a figure in mind, but I have resisted putting out a figure because it puts unfair pressure on Government. We need to see the figure (from Government) then issue an opinion on whether it's appropriate.

"Last year we provided them with detailed surveys of members. We did get a tremendous response from more than 2,000 employees out of 3,000 in the international business sector and the top 20 companies responded.'' Charles Gosling, a member of the executive committee of the Chamber of Commerce's visitor retail section, said stores would like the same duty breaks offered to hotels for capital refurbishment which were contained in the Hotel Concessions Act.

He said it was unfair that retailers had to subsidise the concessions to hotels at a time when shops were in desperate need of help.

"We have had appeals to the Minister for several years that we find ourselves in a particularly difficult position today to offer competitive pricing in comparison with the US,'' said Mr. Gosling.

"We are paying duties, I believe 7.5 percent for clothing, which are added to the high cost of shipping and high operating costs in Bermuda.

"With a number of other product groupings like clocks, watches, sports goods, and jewellery, we are finding it very hard to compete.

"The PLP had it in their election platform that they are in favour of duty-free shopping, and I can only assume that they still are.

"The Tourism Department surveys show that shopping is the second favourite activity after visiting the beaches and duty-free would encourage more tourists to come to the Island.

"We would be able to reinvigorate an industry that is going through a hard time, and it would lessen the cost of living in Bermuda.

"I am not calling for all duties to be scrapped, but to reinvestigate the different categories, and there are quite a large number of interests to the tourist where we could scrap duty, such as clothing, jewellery and perfume.

"We are being told to reinvent ourselves, but we are subsidising a lot of other industries when Government has concessions on customs duties to encourage hotels to redevelop.

"We would love to have similar concessions to redevelop our stores.'' "We are the second largest employer of Bermudians and we really feel that if anyone needs care and attention, it is us.

"There are rumblings of a recession on the horizon and I would hope the Minister would think carefully before increasing any new capital ventures because it would increase the cost of doing business in Bermuda.''