Finance Minister Paula Cox says the reasons behind Trimingham's closure were many - but the Island's duty structure cannot be blamed.

Ms Cox spoke out after a former president of Trimingham Brothers Ltd. - the Island's oldest retailer - said only a change to the tax system would have saved the store, following the announcement last week that the store would shut down at the end of July.

Eldon Trimingham, who retired from Trimingham's seven years ago, has said the store could have been saved by only one thing: replacing customs duty with sales tax. In a letter to The Royal Gazette <$>published today Mr. Trimingham said Bermuda's failure to follow the lead of the UK, Canada and US in slashing “their duty structures and converting to sales tax and VAT to lower their costs of living” had led to Trimingham's demise.

Mr. Eldon Trimingham - succeeded by his son, Lawrence Trimingham, when he retired from the company - has long called on Government (both current and past administrations) to do away with duty being levied on retailers in favour of a tax paid at the point of sale.

<*p(0,12,0,10.8,0,0,g)>In an e-mailed response to The Royal Gazette, <$>Ms Cox took exception with that claim: “There are likely to be many opinions and analyses about the factors that led current directors of Trimingham Brothers to take the decision to exit from the retail business.”

Pointing to a Press release issued by Trimingham's last week, Ms Cox said she believed president Lawrence Trimingham when he said there were numerous factors behind the decision.

In that statement, Mr. Trimingham said: “Factors in this decision are changing buying patterns and the changing Bermuda economy. In detail, these include the decline in tourist spending on the island; the ever expanding retail market in the United States; the ease of travel making it more and more attractive for Bermudians to shop overseas and the rising cost of doing business in Bermuda. These are all challenges confronting the local industry and are basic reasons why the shareholders have decided to exit the retail business.”

<*p(0,12,0,11.1,0,0,g)>Ms Cox said: “Mr. Lawrence Trimingham, President of Trimingham Brothers, did refer to the rising cost of doing business in Bermuda. It seems that some observers including members of the media have taken this to mean the customs tariff. If so, then the association is faulty at best.”

She said Lawrence Trimingham's “rising costs” comment would not relate to the tariff structure “for tourist-related goods because over the years, customs duty on tourist-related goods has been consistently reduced and is below the standard rate of 22.25 percent.”

“In many instances, the rate of customs duty on these products would not be materially different from the rate of sales tax in some other jurisdictions,” she explained.

<*p(0,12,0,10.5,0,0,g)>Previously, Ms Cox told The Royal Gazette <$>while it was unfortunate that one of the Island's largest retailers was closing its doors, she said there was no indication that the sector was suffering to the point of needing duty relief.

Although retailers have been lobbying for several years for lower duty rates and/or concessions similar to those extended to hotels and restaurants which give duty relief for materials brought in for refurbishment, Ms Cox said she did not see a change to the duty structure as necessary.

Opposition leader Dr. Grant Gibbons said retailers who depended on tourist trade were clearly suffering, pointing to a decline in annual visitor expenditure falling off by half a billion dollars from 1998 to now, compared to the 1995 to 1998 period. On average, Bermuda has seen $120 to $150 million less each year in visitor expenditure, with tourists spending out $483.8 million in 1998 compared to $342.5 million in 2003.

Dr. Gibbons, whose family runs leading retailer Gibbons Company, said the fall in visitor expenditure was only one area hurting retailers, but a return to past levels of expenditure would help.

He didn't see sales tax as being a real solution to the problem though, instead he suggested Government put in place duty-free shopping for visitors, saying a system could be devised to reduce the cost of duty on goods at the point of sale. He said Barbados, Canada and the UK have similar plans in place for visitors, but said Bermuda should do it in a way that was “customer friendly” or at the point of sale, rather than seeking reimbursement at the point of departure.

Dr. Gibbons cautioned however that the only way to fix the retail situation was to address the overall decline in tourism.

“What you have is a chicken-egg situation now that we have lost on tourism. The Bermuda product is less attractive, and a number of stores on a visitor-oriented basis have been lost. We have to work on the product in a major sort of way,” he said, including bringing new resorts online at the former Club Med site in St. George and at the 250-acre Morgan's Point site in Southampton.