Aaron Smith, president of Igility, has added to the outsourcing debate by calling on Government to lower the payroll tax burden for local businesses in Bermuda.

Mr. Smith reckons the tax, which is the same for Bermudian and international businesses, is unfair on the local enterprises considering the generally smaller amount of profit they make compared to the big global brand players, including some of the top names in the insurance and reinsurance industry.

And he is urging the powers that be to relieve some of that burden to encourage local business to flourish on the Island.

"There are a number of issues contributing to a high cost for local businesses I believe, including the fact that local companies share an unfair burden of the taxation in Bermuda," he said.

"The idea is that you pay a payroll tax in Bermuda and you have to pay whether you are profitable or not.

"You don't have to be a rocket scientist to realise that there is only so much revenue that, say, for example, 70 or 80 people can generate, but when you calculate the payroll tax you are paying on top of that, you are paying a lot of tax.

"Whether you make $10 million or lose $5m, you are still paying the payroll tax.

"That is tough for a lot of local businesses and you see a lot of local businesses struggling because of that tax burden and I think there is a lot of ways that you can help to alleviate that."

In Canada, for example, companies only pay payroll tax they make a profit, but do not if they make a loss, whereas in Bermuda it is the same across the board, every company pays the same payroll tax regardless of profitability, which is part of the reason why Mr. Smith has taken the step to run an offshore back office for financial and accounting services out of Canada.

"You pay a lot of payroll taxes in Canada, but only if you are in profit," he said.

"In Canada, you know what you are paying when you are making money, but here it doesn't work that way.

"So, we are finding a good balance between offshoring our own company's back office, as well as so of the services we offer customers."

And Mr. Smith believes there are a number of ways in which Government can ease the pain for local enterprises, such as different levels of taxation between Bermudian and international businesses.

"I think local businesses should be taxed differently to international businesses," he said.

"A very simple approach could be to cut the payroll tax from 14 percent to seven percent.

"The money that is saved would be retained within Bermuda and would help to encourage local businesses to grow.

"Payroll tax can amount to 30 or 40 percent of a local business's profit going on taxes, whereas that can be 0.3 or 04. percent for some of the big international companies whose profit has several zeros.

"We have solutions and we want to see business flourish in Bermuda and we want to be part of that, but it is very difficult at the moment as things stand."