Customs duty on clothing as part of plans to rescue the Island's tourism-oriented retail sector.

The move, reported in yesterday's Business section, is aimed at making the Island a duty-free destination and a magnet for shoppers once again.

The news comes after Government announced that overseas spending in February jumped 20 percent to $1.98 million -- a figure which is almost certainly understated as most people under-report their Customs declarations.

Still, $2 million is a pretty good piece of change, especially when local spending was estimated at $39 million. Large proportions of local spending go on cars, food and other items that can only be bought here, and those sectors have also shown success. In the meantime, department store and hardware store sales rose slightly and clothing and tourism related shops saw sales fall.

This suggests that the economy remains strong, but the growth is being driven by international business and construction, while tourism continues to slump.

Given that, it makes sense to look at ways that the tourism side of the economy can be strengthened. Tourism could take a leaf out of international business's book.

International business comes here because Bermuda boasts a good location, modern infrastructure and expertise, business friendly regulation and low taxes.

As a result, the sector has grown and grown, and consistently turned in more and more Government revenue.

Tourism can also boast a good location, and considerable work is being done to improve the infrastructure, both in terms of hotels and in terms of identifying and promoting local attractions.

Where the Island falls short is in costs -- and part, although by no means all of this -- is due to the tax burden placed on the tourism industry both through taxes on hotels and through Customs duties.

It has long been an instrument of Government policy to lower taxes in order to raise economic growth. That is essentially what the retailers want, arguing that lower duties mean lower prices and therefore higher spending; thus the economy grows and tax revenue should at least match previous years' receipts.

Of course this does not always work -- the US Government attempted this in the early 1980s with disastrous results as the US budget deficit ballooned.

But if cuts can be judged correctly, it can work, and the retailers apparently believe eliminating duties on clothes will boost sales -- thus improving employment and tourism overall.

They could be right and it would certainly make sense to lower duties in these areas, although outright elimination would seem to be risky.

Most importantly, the current policy is not working. Taxes and other costs are driving away visitors, meaning that tax revenues from the sector are plunging anyway.

The retailers also have a role to play here -- it is not up to Government to do all their work for them. In many shops, standards of service are dire and the quality and variety of goods are limited. Beyond that, some markups border on the criminal, even when duties, transport costs and local labour costs are factored in.