Bermuda looks set to avoid the Budget blues tomorrow in the last financial package before the General Election.

But Chamber of Commerce president David Rowntree said Government needed to be leaner and cheaper -- which would leave room for tax breaks for hotels and tourist-dependent shops.

And he warned that without a financial lifebelt, more tourist-related operations could sink without a trace.

Mr. Rowntree called on Finance Minister Grant Gibbons to consider more private sector involvement in areas traditionally handled by Government -- like buses and ferries.

He added that Government should devote more attention to bolstering the ailing tourism industry and closely-allied retail trade.

Mr. Rowntree said: "We need tax incentives to encourage investment in hotels and to return profitability to the retail sector.

"I'd like to see duties removed entirely from products which are sold to our visitors.'' And -- in what appeared to a veiled swipe at the international business sector and associated industries -- he added: "There are other areas which aren't taxed as highly as they should be and perhaps that should be looked at.'' Mr. Rowntree added that the heavy costs for the hotel industry -- inevitable in a high-wage economy like Bermuda -- could be reduced by cuts in taxes for services.

He said: "A lot of tax is paid in fuel and the hotels expend tremendous amounts of money in electricity costs. We need to seriously look at the fact we are in tourism.

"If we reduce the cost of doing business here, if we return to the higher levels of visitors we used to have, we will get more people on the Island and more money spent.'' Casualties in the hotel sector in the last financial year included Longtail Cliffs in Warwick, Palm Reefs in Paget and the west section of Mermaid Beach.

The international business sector urged Dr. Gibbons to play it safe.

Hotels, shops sending out SOS to Finance Minister Glenn Titterton said: "Clearly we would like to see the existing environment, which is conducive to the development of international business, to continue.

"We don't want to see any form of taxation which would impede the growth or formation of international business in Bermuda. But we have no reason to believe any such steps are intended.'' He added that pre-General Election Budgets were traditionally without major shocks -- and said he saw no reason for tomorrow's financial blueprint to be any different.

Mr. Titterton added: "The Bermuda economy is doing extremely well despite the difficulties our friends are experiencing in tourism -- I think we would have to say things are being well-managed.'' He said that international business paid the same taxes as anyone else, including payroll tax -- and insisted his sector was aware of the importance of tourism to his own sector because of the need for a quality environment and good air links.

Mr. Titterton added: "All of us are anxious that there should be equitable tax distribution. We don't want it to be unduly favourable to us or unduly unfair either.'' The big two banks -- the Bank of Bermuda and the Bank of Butterfield -- were yesterday holding fire until the details of Dr. Gibbons' Budget are revealed.

But Bermuda Commercial Bank managing director Peter Roberts predicted a cautious Budget in line with Bermuda's reputation for "probity and quality.'' He said: "I expect the budget to be prudent, conservative and unsurprising -- budgets are part of that picture of steady management of the economy.'' On the hospitality front, hotel chief William Shoaf called for airport improvements to be continued and the Tourism Ministry's budget to be maintained.

And he said tax breaks given to hotel modernisation programmes two years ago should be extended to the small, independent restaurant sector as well.

Mr. Shoaf -- whose Elbow Beach Hotel in in the throes of a multi-million dollar refurbishment programme -- said hotel management Rafael could not have drawn up such an ambitious plan without the 35 per cent to five per cent tax cut on modernisation programmes.

He said: "The Refurbishment Act is a good one -- quite frankly, the ills of the hospitality industry in Bermuda are of such a magnitude you can't fix them with small, piecemeal things.

"The Budget has to address how we can provide incentives for further investments and ongoing investments.

"We also have to make sure the dollars we spend to bring tourists to the Island are well-spent and that enough is spent so we can compete.'' And he added that smaller, independent restaurants, a complementary business to the major hotels, should benefit from tax cuts.

The grim death toll of restaurants over the last year or so includes the award-winning Romanoff and Once Upon A Table, plus Chit Chat/Four Star Cafe, all Hamilton.

Elsewhere, Somerset's Loyalty Inn and the Plantation Restaurant in Hamilton Parish also fell victim to the chill economic wind.

Mr. Shoaf said: "We are losing a fair number of the smaller restaurants -- they should be allowed to have the same refurbishment ability.

"It would make them a better product and in the end, they would remain in business.'' Outspoken Smugglers' Reef owner John Casling -- a long-time critic of Government's tourism and retail policies -- shut one Bananas store on Front Street at the end of last year.

And he accused Government of focussing too much on international business to the detriment of tourism.

And he repeated fears that the tax structure -- which takes duty on imports prior to sale -- was hurting the Island retail sector.

He conceded that a major review of Bermuda's tax system is underway -- but said the results of that would not be seen until later this year.

Mr. Casling said: "This is going to be an election budget, so hopefully it won't be too hard on the man in the street. And nobody in business is expecting much relief -- I think things will remain basically the same.'' Bermuda Industrial Union and would-be Hamilton East MP Derrick Burgess backed calls for a lighter load on the hotels.

And he pitched in for the elderly, children and the family, with calls for better seniors' healthcare, more playgrounds, as well as lower-cost housing.

Mr. Burgess said: "If we continue to make life harder for the weak, that means the chain gets weaker and the stability of the country is weaker.'' But he resisted calls for privatisation of Government-run sectors of the economy.

He said: "It would be a wrong move -- all it does is take us backwards because wages go down. We are trying to keep family values intact.

Privatisation will ruin them.'' HOUSE OF ASSEMBLY HOA