budget aiming to foster economic recovery.

Finance Minister the Hon. David Saul said the principal goal in his 1993-1994 budget was to support the Island's delicate recovery from "the worst recession to hit the Island since the 1930s''.

In a double-barrelled plan to ease the cost of living and promote job creation, the Minister kept taxes to an "absolute minimum'' and introduced tax relief for businesses.

"Now is not the time for Government to increase the rate or level of taxation,'' he told MPs.

"It is felt that any move to increase taxes this year would certainly undermine the anticipated growth in household incomes and weaken the economic recovery.'' Dr. Saul's Budget -- which the Opposition immediately labelled an election manifesto -- waived tax hikes on items normally marked for annual increases.

Residents were spared higher land taxes, customs duties and Government fees.

In addition, the Minister moved to reduce costs for hotels, retailers, condominium buyers and the retail and international business sectors.

And in an effort to encourage job creation, Dr. Saul increased employment tax exemptions and deductions for small businesses.

He said the move, which could affect up to 700 businesses, would cost Government about $800,000 in revenues.

"Notwithstanding the loss, this step is considered to be a definite long-term investment in the economy as a whole as it will assist small business and encourage employment as we emerge from recession,'' he said.

Dr. Saul said it was imperative that Government and the private sector concentrate on keeping costs down so the Island "can achieve a higher level of competitiveness in the world markets of tourism and international business''.

He put Government at the forefront of his cost-control plan by limiting spending to $379.4 million, or $28.1 million below last year.

Government spending on all day-to-day operations outside of its building projects was pegged at $331.7 million, 2.5 percent below the 1992/1993 budget.

Dr. Saul said Government would look closely at controlling personnel costs through overtime restrictions and staff attrition plans. Government efficiency was a major priority.

He acknowledged that the tight spending controls could have some impact on service to the public.

But departments "will work to minimise these effects through increased efficiency and improved productivity''.

Dr. Saul said policies to cushion people from the continuing effects of recession would continue.

Accordingly, he doubled the social assistance budget to $6 million, increased housing allowances to $3.5 million and increased the grant to the hospitals by $2.8 million.

The new Budget also commited $750,000 to the implementation of the National Drug Strategy.

Dr. Saul's 20-page Budget statement portrayed an Island economy gravely weakened by the recession and only just taking its first steps toward "modest'' recovery.

In a sombre review of the fiscal year just ending, he catalogued shortfalls that contributed to the Island's declining fortunes: visitor spending down 7.3 percent, consumer spending down 3.5 percent and few pay rises in the workplace.

For the second straight year, Government revenues declined, falling a steep $12.5 million below expectations. All measures of economic activity -- customs receipts, hospital levy and hotel occupancy and employment taxes -- were down.

The performance left the Government with a current account surplus of $10.6 million, a figure Dr. Saul described as inadequate given the demands of its building plans.

The Minister's forecast of $352.5 million in total Government revenues this year -- $2.4 million less than in 1992/1993 -- showed expectations recession would continue to grip the Island.

His forecast for the year saw no real growth in tourist spending and a marginal rise in foreign currency earned by international businesses.

The depressed real estate market was also given a break with a reduction on the tax on condominum purchases by non-Bermudians.

Even with business-boosting measures, Dr. Saul's 1993/994 budget will run a deficit of $32.2 million. New borrowing is to be limited to $26.7 million.

Dr. Saul said the "dramatic'' reduction in revenues in recent years had prompted a "full review'' of Government's building plans for the next few years.

He said borrowing would be used to pay for projects, including a five-year $100 million plan for reorganisation of the school system.

After his speech to the House, Dr. Saul stressed the need for all sectors to help revive the economy.

The Budget "rests on the conviction that the Government alone cannot sustain economic recovery, but that a cooperative effort between the public and private sectors is required for true long-term economic success,'' he said.

"In the coming year, all of us who collectively comprise Bermuda Inc. must work together and avoid conflict and selfish behaviour at all costs.''