insurance premiums.

The idea was only to tax domestic insurers -- but it left the then-healthy Bahamian captive insurance industry uncertain about its future. The companies left... and came to Bermuda.

Last week, Telecommunications Minister Renee Webb came close to returning the favour, if not to the Bahamas, then to some other domicile, by floating the idea of charging a fee on all transactions conducted by Bermuda e-commerce companies.

Asked why Bermuda would consider such an idea, she explained: "The only reason why we tax anything is because Government needs revenue.'' Of course Government needs to earn revenue from economic activity on the Island, but there is no sense in levying a tax which would destroy the industry it is trying to benefit from. That is exactly what would happen if Bermuda levied a direct tax on e-commerce companies.

Bermuda should instead use its extraordinarily successful international business model -- the envy of the rest of the world -- to build e-commerce.

Tax revenues gained indirectly, through payroll tax and so on, will provide Government with plenty of extra revenue without the need for a direct tax.

Furthermore, how Government would monitor the collection of taxes on every single transaction is unclear. The sheer number of transactions, some worth a few dollars and others millions, would make it impossible to track them without a large regulatory framework which would eat up what little revenue was raised by the tax in the first place.

So it would seem the tax is a bad idea and certainly reaction from Bermuda's fledgling e-commerce sector has been universally negative, with one chief executive officer comparing the idea to cutting down a seedling for firewood.

To her credit, Ms Webb has since backed away from the remarks, although she has not disavowed them completely.

Nonetheless, one has to wonder why she raised the issue in the first place.

Ms Webb has so far proven to be a relatively able Minister of one of the most difficult and technically complex portfolios in the Government.

The most charitable explanation for her behaviour is that she was floating the idea in the hope that it would be immediately shot down; that would be a ham-handed approach, but one containing a sort of logic.

Ms Webb has said she was simply identifying different ways that revenue could be raised, and said a nominal transaction fee was one way that could be done.

She also acknowledged that taxes could be raised indirectly via payroll tax and Customs duties.

Ms Webb is a highly educated woman with experience in international business.

At best, she was naive to think that suggesting such a measure would not send a chill down the companies already doing business here and would act as a serious deterrent to those considering coming here.

If the Government is serious about e-commerce and believes it would benefit the Island, then Ms Webb must let the industry know that there are no plans to levy such a tax -- or even think about it.