a fee to operate bonded warehouses. And the two largest firms said yesterday they will be forced to absorb the additional $10,000 that is being proposed.

The Budget stated, "the designation of a facility as a bonding warehouse has been hitherto granted without cost ...'' A surprised president of Gosling Brothers, Ms Nancy Gosling, retorted, "That's not true.'' She said companies that have a bonding facility are required to pay a warehousing tax that amounts to 2.5 percent of the total customs duty.

"If, for example, you pay $4 million in duty, then you also pay $100,000 in warehousing tax, because you have a bonding facility. If you don't have that bonding facility, you don't pay.

"Obviously, when he made this statement, he totally forgot about it. But what this means is that if you paid $100,000 before, you'll now pay $110,000, which means your warehousing tax is 2.75 percent.

"But also, if you have merchandise in bond for more than two years, which is often the case, especially with wines, you pay five percent. The fee goes up to five percent after two years.

"So what surprises me is that the Minister doesn't know that we are already being charged for that, and very substantially, I might add.

"But if you are a smaller company, that $10,000 becomes more significant. It will be extremely hard on the small companies.

But Finance Minister the Hon. Dr. David Saul said yesterday the 2.5 percent charge was to pay the costs of Customs officers, not for the actual licensing of a bonded warehouse.

He said, "It's for the services and work that has been done by Customs, etc.

It's for all the work that they do.

"The new charge, on the other hand, is a licensing fee for having the bonded warehouse, whether there is any stock in or not.'' Ms Gosling was not the only one taken aback by the new levy.

Mr. Richard Hartley, the managing director of Burrows Lightbourn Ltd. said, "I was surprised with Dr. Saul's comments in the Budget that it was a free service. We are already paying two and a half percent that we don't even include as part of our selling price. We just take it as a cost of doing business, as part of our company overhead.

"But it is probably fair to assume, based on what we sell and what the other companies probably sell, an estimate that the Government is al ready taking about $10 million in duty from the drinks trade.

"Then when you figure they get an additional 2.5 percent of that when it is ex-bonded out of the warehouse, you are probably talking about another $200,000 to $250,000 in further taxes.

"These are rough figures, bearing in mind also that we don't put beer in bond, but rather save the two and a half percent by paying the duty immediately.'' Both companies were happy no further duty was put on liquor.

Mr. Hartley said, "He (the Minister) didn't want to put an increase on liquor this year. We are very grateful that he didn't, because we are already paying huge duty in Bermuda. I don't think that the general public understands how much in duty is being paid.

"The duty is something like $10 on a bottle of scotch. Something like roughly half the total cost of a popular bottle of spirits could be going to pay the Government's duty.'' There are seven liquor companies on the Island.