be saddled with huge debts, according to a report by an influential committee.

Since March a comittee of the Bermuda branch of the Institute of Directors has been scrutinising the state of the Island's economy and future prospects.

It concludes that Government must cut spending and an independent review of the taxation system should be carried out -- including looking at the possibility of a national lottery to raise extra cash.

The recommendations come as Government heads for a $56 million debt at the end of the financial year -- mainly because borrowing has increased from nothing to $172 million in ten years.

According to the report the increasing debt, caused by projects such as the incinerator and Westgate, must be brought under control and it acknowledges tough decisions must be made or Government could be forced to abandon any future large schemes.

The report says: "The committee has indicated steps that in its opinion need to be addressed now if Bermuda's economic viability is to stand the test of both domestic and international scrutiny.

"We believe that hard and far-reaching decisions must be made now to set the pace for future administrations.'' On tax the committee suggests appointing an independent taxation advisor to look at the system in the long term.

In the short-term it suggests: Implementing a tax based on a property's rental value and scrapping the tax for a foreign buyer.

Introduce a consumption tax on all sales of goods and services to replace customs duty and corporate service tax, plus make slight changes to the Payroll Tax.

Appoint a "select non-partisan committee to include representatives from the churches'' to examine the possibility of a national or international lottery.

"We believe a fresh look at the issue of taxation and its disposition should be taken by the appointment of an independent taxation advisor.

"He would work with Government and other appropriate bodies to set a fair and equitable apportionment of taxation amongst those who live and work in the Island as well as those who use Bermuda in the international arena,'' said the report.

The committee believes there is limited scope for raising cash from taxes in Bermuda and Government must bring its spending under control to reduce debts.

Report urges cuts to Govt. spending, review of taxes The report said Government spending would soon outstrip the amount it raised in tax and recommended a series of steps to bring spending under control, including: Drawing up a business plan for all departments.

Axing perks such as private cars for Ministers and department heads.

Looking at what services can be tendered out to the private sector.

Selling off un-needed Government land and buildings.

Examining spending such as $80 million annually for `grants and contributions'', $30 million for "personnel, special and professional services'' and $18 million for "advertising and promotion''.

In addition the committee recommends further encouraging tourism and international business, but it also wants the Island's youth to be "nurtured'' to help support the economy's twin pillars.

The report suggests setting up a technical school to train young people in skills and even recommends building a university, linked to a large institution in the US, on the base lands.

Last night chairman of the IOD, Geoffrey Moore, said: "The Minister of Finance has received our report very favourably. He is aware of the situation and I am sure he is taking steps to correct it.

"We have tried to give some new ideas in a non-political way and look at the future.

"We are not adamantly saying we have to do this or that. It is giving ideas for the future so that our children are not saddled with a massive debt.'' Finance Minister Grant Gibbons was not available for comment last night.