Government has increased the import duty rate for cigarettes, effective April 1, in an effort to force smokers to quit the habit and improve public health.

The tax on cigarettes will be increased to 18 cents per unit up from 15.5 cents per unit as stated in the Budget for 2008/2009.

Friday night in the House, Minister of Finance Paula Cox called it a "health tax".

However, Opposition Finance spokesman E.T. (Bob) Richards said Ms Cox was engaging in wishful thinking by believing that simply raising the retail price of cigarettes would lead to smokers quitting.

They were debating a bill titled the Customs Tariff Amendment Act 2008, which was later passed.

Ms Cox stated: "World-wide, smoking is widely regarded as the leading preventable cause of death linked to cancer.

"It is the hope of Government that the increase in the duty rate on cigarettes leading to higher retail prices will encourage smokers to quit and deter Bermuda's young adults from buying cigarettes and becoming nicotine addicts."

She added if the duty rate fails to modify the behaviour of smokers, the increased revenue yield from cigarette importations will help to offset public health costs associated with the treatment of smoking-related disease.

Mr. Richards responded to the comments in the House: "The Minister was perhaps engaging in some wishful thinking in saying that perhaps the increase in tax on the price of cigarettes will have some effect on how people smoked.

"No matter how much cigarettes cost, people are going to still buy them because of the demand for them. As she did mention, rightfully so, cigarette smoking is an addiction.

"So it doesn't matter what the cost is, so she could have put up the tax even more and it wouldn't have made a difference for those folks who smoke cigarettes."

In addition, Ms Cox announced the bill reduced the duty rate for hybrid motor cars, which she defined as motor cars equipped with a hybrid power system which allows either a spark-ignition or a compression-ignition, or an internal combustion engine to work in combination with an electric motor.

Ms Cox added: "Mr. Speaker, hybrid motor cars have strong environmental advantages. Such vehicles produce less noxious pollution than conventional motor cars, including lower emissions of greenhouse gasses.

"In some cases gasoline consumption can be cut by up to half and it is likely that many such 'hybrids' will be soon able to use advanced fuels such as ethanol and biodiesel, which will make them even more environmentally friendly."

Pleasure craft including motor boats and sailboats will see a higher duty rate of 55 percent from 33.5 percent because they are viewed as luxury items, explained Ms Cox and their numbers continue to proliferate in Bermuda. I would note, however, that the duty rate for non-inflatable rowing boats is not affected by the duty increases and will remain at a lower rate," she continued."

In the Bill, the existing duty rate applicable to class-racing sailboats will not be changed, provided that the boat being imported is an International Sailing Federation (ISAF) recognised class.

The legislation effectively increases the duty rate on passenger motor cars — the existing tiered rate of duty on passenger motor cars remains at 75 and 150 percent.

Duty rate increase is achieved by lowering the threshold value that separates the two rate tiers.

Government will also provide duty concessions for the importation of limousines.

Concessions for the vehicles were first introduced in the House in September 2007 and expire at the end of this month.

"In order to maintain the existing concessionary rate and end-use duty relief, it's proposed to promote the economic activity of operating a limousine service to Bermuda to provide VIP transportation alternatives to motor taxis," noted Ms Cox.

Meanwhile, Ms Cox introduced a Bill called The Retail Shops (Temporary Customs Duty Relief For Capital Investment) Act 2008, to provide relief to retailers making certain investments in their business.

"(It will) provide relief from Customs duty to retailers who make capital investments in their shops to improve the ambience of the store or the display of merchandise or both," she said.

"There are some 380 retail outlets in Bermuda that vary in size and in the lines of merchandise that they offer to consumers and householders. In terms of the size of the sector, it is one of the biggest industry sectors where a Customs duty concession has been considered.

"In comparison there are some 47 guest accommodation properties, hotels, guesthouses and cottage colonies and about 134 restaurants that are eligible for consideration of concessions under existing legislation."

Mr. Richards responded: "Anyone who looks at Bermuda's economy will appreciate that the retail sector has been the real poor cousin of Bermuda in recent years.

"It's been a depressed sector, quite frankly, it has certainly lost a number of people working in it and we have seen closures of many retail establishments.

"I am very pleased to see this here tonight, it certainly is a step in the right direction, we have to try to assist, where we can, in sectors that are having difficulty.

"The whole advent of the Internet has really hit the retail sector very hard particularly as local businesses are concerned."