Recommendations by consultants on changing Bermuda's tax structure are due to go before Cabinet in two weeks and will be made public soon after, Finance Minister Grant Gibbons said yesterday.

Dr. Gibbons said the recommendations, if implemented, would help make Bermuda's retail sector more competitive. Corporate tax and customs duties are the main focus of the exercise, but an already completed land tax review, and a stamp duty review under way will also be incorporated into Government's plans.

Consultants began the task of reviewing Bermuda's entire tax structure in November 1997. Harry Gutman of US law firm King and Spalding and economist Eric Toder, formerly with the US Treasury conducted the review.

Dr. Gibbons was speaking during a press conference about the state of Bermuda's economy in what also amounted to a review of the UBP's economic record over the past five years.

The economic health of the Island was good, and for those parts that weren't measures were being taken to fix problems was the message Dr. Gibbons wanted to convey through just released first quarter 1998 statistics.

Since 1993, when the last general election was held, the economy grew at an average rate of 4.2 percent in real terms a year. That's double the 1993 forecast target of two percent a year, Dr. Gibbons pointed out.

The growth is being fuelled by "healthy expansion'' in international business and construction sectors, and is forecast to continue at between 2.5 to three percent this year, he said.

Hidden in that average growth rate however is the slumping tourism sector. Air arrivals declined six percent and spending by those arriving by air declined 12.3 percent in real terms during the first quarter of 1998 compared to first quarter 1997 (see stories in news section).

During the first quarter 1998 retail sales increased 4.3 percent in real terms above the 1997 first quarter. Inflation during the first quarter was 2.1 percent year-over-year, the same as the 1997 level.

Dr. Gibbons said retail sales increased even in the face of "intense'' international competition. Spending overseas by returning residents, one indicator of the competition, increased less than one percent during the first quarter to $9.56 million compared to first quarter 1996.

He said mail order companies and Internet sales also posed a competitive threat to the Island's retailers.

"Needless to say there is still some work to be done to improve competitiveness,'' he said.

Another sign of the buoyant economy was the decline in unemployment, which declined to 415 people registered as jobless in 1997, less than half the number registered in 1995 and 28 percent below those registered in 1996.

Meanwhile total jobs filled reached 35,296, an increase of about two percent over 1996. During the past five years there has been a net increase in 1,800 small local businesses he said.

In 1997, non-Bermudians held 6,525, or 18 percent, of those jobs, 836 less than the number of non-Bermudians employed in 1996. Bermudians held the remaining 82 percent of the jobs.

"Bermudians are capturing an increasing percentage of the professional, technical, administrative and managerial jobs which are being created by the expanding economy,'' Dr. Gibbons said. "In 1997 Bermudians won 58 percent of the new professional and technical jobs versus 46 percent in 1996.'' Construction was a big boost to the local economy. Construction spending has grown to $130.1 million in 1997, a 50 percent increase over 1996 spending.

Total wages paid in the construction sector increased 26 percent to $83.1 million in 1997. Non-Bermudians made up 12 percent of the construction workforce, about the same as the previous year.

"First quarter statistics on the gross additions to the stock of residential dwelling units is also very encouraging with 66 units completed, the highest number for a single quarter since the first quarter of 1995,'' he said.

Economy growing at 4.2 percent The international sector also showed good growth. There were 10,152 companies on the international register at the end of first quarter 1998, a year on year increase of about seven percent. Expenditures by international business has increased at an annual average rate of about 21 percent from 1994 to 1997, and the companies created 247 additional jobs in 1997, a ten percent increase.

"The real good news in these figures is that Bermudians are progressively moving into higher paid positions in the international companies,'' he said.

"In 1995, 28 percent of Bermudians in international companies were working as either managers, accountants or bookkeepers, but by 1996, 39 percent of the Bermudians working for international companies were in these higher skill, higher paid categories.'' Looking ahead he said future growth depends on continued sound macroeconomic and fiscal management, continued partnership with business,"avoiding sudden changes'', an eye on the international scene, and laying the groundwork for "new economic opportunities''.

UPBEAT MESSAGE -- Finance Minister Grant Gibbons, who gave Bermuda's economy a clean bill of health yesterday.