Tomorrow's Budget will be make-or-break for the Island's struggling shopkeepers and hotels according to industry leaders.

And Finance Minister Eugene Cox is under increasing pressure to deliver tax breaks and financial sweeteners to tourism and retail operators when he takes to the floor of the House of Assembly tomorrow.

Chamber of Commerce retail division chairman Ian Smith led the charge with a call for across the board cuts in duty rates to keep the retail sector afloat.

And Mr. Smith warned that if Government did not throw the sector a lifeline, cutbacks could mean job losses and further damage to Bermuda's image as an upmarket destination.

He added: "There are some causes for optimism -- but this Budget, for a lot of retailers, is going to be make or break.'' Mr. Smith said: "We are really at ground zero -- and somebody has to do something about it.'' Mr. Smith agreed the retail sector had been disappointed by the Progressive Labour Party's debut Budget last year -- particularly because there was no commitment to duty-free shopping or duty cuts.

And he said: "If it doesn't happen this time, it will be a very difficult pill to swallow.'' Mr. Smith, of jewellers Astwood Dickinson, said the retail sector "bore the brunt'' of the Bermuda tax burden -- and was affected as much by declining tourism as the hotel sector.

"In our talks with the Finance Ministry, we presented tourism as a whole package and they certainly realised the importance of this to Bermuda.

"Retail is one of the major cogs in the machine and if we don't get something, we will see closures like we did last year.

"It won't just be closures, there will be cutting back -- unfortunately that means staff -- and retail is the largest employer of Bermudians on the Island.'' Other Island industry insiders said massive land tax hikes last year had hit already struggling businesses -- especially those with large warehouses.

Mr. Smith said: "The sector is depressed because of the bottom line -- we have some major players here who are talking about closures.

Mr. Smith was backed by the Chamber's chairman of the restaurants and nightclubs division, Tom Gallagher, who asked for his members to get tax breaks similar to those given to the Island's hotels in the past.

Mr. Gallagher said any increases in duty on alcohol could not only kill off some marginal businesses, but would add to cost of a holiday in Bermuda at a time when the number of visitors is in decline.

He added: "I'd also like to see the restaurants get the same kind of tax breaks for capital refurbishments that hotels do.'' Budget will be crucial "This is a major issue because we need a level playing field -- restaurants within the hotels have benefited from a relaxation on their capital costs.

"Anything which can help us keep our costs down, and pass on these savings to the tourists especially, would be welcome.

"There should be incentives to local business to invest in training and development of staff and that's a vital component of making Bermudianisation work -- I'd hope we'd see something along these lines.'' Yesterday hoteliers also warned that anything less than a reduction in their financial burden could spell suicide for the industry.

Owners and general managers across the Island are desperately hoping tomorrow's budget will bring some relief to their rising overheads -- daring not to think that there may be any bad news.

Mike Winfield, president of Cambridge Beaches, believes, like many that the cost of doing business on the Island must be reduced, and tourism must receive the attention that other industries have.

"We are hoping there will be a generic focus on hotels and the tourism industry, recognising that this not only the oldest primary industry but the largest employer in Bermuda,'' he said.

"It deserves as much focus as international business.

"We are hoping for across the board recognition, not giving with one hand and taking away with the other.'' And Mr. Winfield said last year's Land Tax increases had cut deep into the hotel community, rendering hollow pre-election promises that the Government would look at incentives for hotels.

A report prepared for dozens of hotels by consultants formed the basis of objections to Land Tax increases, suggesting better ways of applying the levy, but Mr. Winfield said the reply from the Minister of Finance was "very unfriendly and uncaring''.

In addition, he said an off-season break on occupancy tax would ease the burden on many properties. And, he added, it was time the Government made a clear statement on what it intended to do about encouraging better air fares to the Island.

Many smaller properties were hit hard by the Land Tax increases, forcing many to consider whether it was worth being in the tourist trade.

Andrea Flood, co-owner of SkyTop Cottages, said this season would be "make or break'' for many of them, words echoed by Marley Beaches owner Gifford Stanton.

She said she would like to see some kind of Land Tax concession, either a lower rate or breaks for hotels.

In addition, she said relief on occupancy tax, allowing owners to charge the rate but only use the funds for upgrading their properties, would be one answer.

"We really need our Minister to fight for hotels to keep these figures down,'' she said. "We are really looking for some type of concession on Land Tax, that is our biggest issue at the moment.'' Mr. Stanton said operating costs were continually rising and there was no room for any more increases.

Fairmont Hamilton Princess general manager and vice-president Michael Kaile said he hoped the relief on duty for capital projects would continue.

And, he said, assistance with alcohol for re-sale in the hotels would be "extremely helpful''.

"The cost of doing business here is an issue, we are hoping that the budget will bear that in mind,'' he said.

Bermuda Hotel Association chief executive John Harvey said he hoped that the Ministers of Finance and Tourism would recall their statements, that they would be trying to make hotels as viable as possible.

He said: "I am cautiously optimistic that David Allen is acutely aware of the challenges facing the hotels..it would be a step in the wrong direction to ignore it.

"For too long the industry has been taken advantage of, it is time to revive it. It is going to take sacrifices in other industries to do that in an attempt turn it around and get it financially healthy again.'' Eugene Cox