said this week.

The existing hospital levy and employment tax should be replaced with a single payroll tax, NLP chairman Mr. Geoff Parker said.

Rather than two flat tax rates of five percent, the new tax would range from three percent to 12 percent, depending on the size of the company's payroll.

"Small businesses are being taxed out of proportion to their ability to pay,'' Mr. Parker told The Royal Gazette . "That's the key thing here -- the ability to pay.'' Based on figures available from Government, Mr. Parker believed revenues of $75.3 million could be raised under the new scheme. That was the same amount Government expected to collect this year through the hospital levy and employment tax.

But the new tax would provide relief to 97 percent of local companies, which employed 48 percent of the local manpower, he said. "This should be a welcome first step to ignite the spark and make the engine of our economy begin to work again.'' The new system would also be simpler and "should reduce the number of civil servants,'' he said.

Finance Minister the Hon. David Saul was off the Island.

Under the present system, companies with payrolls between $66,000 and $200,000 paid an employment tax of five percent but received a deduction from their total of $6,000 per quarter, Mr. Parker said. Those with payrolls above $200,000 paid a straight five percent.

In addition, everyone paid a hospital levy of five percent of payroll. When the two taxes were considered together, `virtually everybody pays ten percent,'' Mr. Parker said.

But while taxes paid amounted to about ten percent of net revenue for large companies, they amounted to between 25 and 100 percent of net revenue for small businesses. "Indeed, some small businesses go into the red and some into receivership because of the unfair flat rate assessment,'' he said.

Under the NLP proposal, companies with payrolls below $200,000 would face a payroll tax of three percent. The percentage would gradually rise as the payroll did, until a company with a payroll above $3.5 million would pay 12 percent.

Hotels, clubs, and restaurants would pay 6.5 percent. Exempt companies would pay about nine percent, as they did now, Mr. Parker said. Charities, churches, parish councils, and approved schools would pay three percent.

The two main parties have denied National Liberal Party accusations of political intimidation.

Government and Opposition spokesmen were answering a statement made by NLP Chairman Mr. Geoff Parker who accused them of fighting "a sneaky gutless campaign'' for the imminent election.

Mr. Parker said: "We understand the United Bermuda Party canvassers and candidates are promoting `If you vote NLP you are giving your vote to the PLP' and vice versa by the PLP canvassers.

"Several of our supporters in Pembroke have been canvassed in this manner and they consider this intimidation as insulting and without foundation.'' He added the NLP is a multi-racial party, promoting Bermuda and Bermudian interests, not black or white interests.

Mr. Parker said: "This political nonsense must stop. Political intimidation will not solve our problems, only prolong them. The voters must be free to choose and elect those they feel are the best qualified regardless of party affiliation.

"This election must be contested on the issues confronting this country such as the economy, the failed education system, the environment, the high cost of health care, high taxes, etc.

"It should not be contested by cowardly back door innuendo perpetrated by immature and childish political hopefuls.'' UBP Executive member Mr. Joe Gibbons hit back. He said: "I think Geoff Parker has become paranoid. I believe he is rightfully concerned about the future of his party.

"I can say that the UBP has not published documents nor have any of our canvassers in Pembroke used the slogan `If you vote NLP it is a vote for the PLP.'' "To my knowledge the NLP do not have any candidates in Pembroke. Why should we waste our time in this manner if they have no candidates?'' PLP Campaign Chairman Sen. Alex Scott said canvassers would be asked if there was any truth to Mr. Parker's allegations.

Sen. Scott said: "I will be asking if any such thing has been detected by our canvassing groups.

"We are not going to be conducting that type of campaign, there are too many real issues to address. We will not be doing any negative campaigning.''