Bermuda's business leaders have given a mixed reaction to Senator Barack Obama's threats to shut down tax havens if he is elected as president of the US.

Some believe it is a case of the new successor to the White House deciding whether to maintain the status quo or overhauling the whole system and whether they realise the benefit the Island's re/insurance industry to the US, while others see it as a slight cause for concern.

But Premier Ewart Brown does not reckon Sen Obama's comments are directed at Bermuda or the reinsurance sector.

Indeed, Dr. Brown previously showed his support for the Illinois Senator by sending him a letter of congratulations on his victory in the Iowa caucus at the start of the Democratic candidate race in January.

"From my assessment it would seem that Sen Obama is narrowing in on the Tycos of the world — not the reinsurance industry which is our bread and butter," he said. "Like the Finance Minister, I don't believe Sen. Obama's comments about tax havens are a direct aim at Bermuda. Minister Cox also quite rightly reminds us that this kind of talk during a US presidential election is not unusual.

"I should also point out that the Finance Minister, the US Consul General and I work hard with leaders on Capitol Hill to ensure American lawmakers understand the mutually beneficial nature of our economic relationship. In fact, on our last joint visit to Washington DC, the chairman of the Ways and Means Committee, Representative Charles Rangel, said he did not regard Bermuda as a 'tax haven'. Any significant change to the US tax policy is routed through his influential committee."

Meanwhile, US Consul General Gregory Slayton told the Mid-Ocean News last week that US politicians have a better understanding of Bermuda than they did in 2004, when presidential candidate John Kerry cited the Island as a poster child for tax improprieties.

Despite Sen. Obama not making direct reference to Bermuda, the Island was on a list of jurisdictions taken from Internal Revenue Service court filings identified as "probable locations for US tax evasion" under the "Stop Tax Haven Abuse Act" introduced by Sen. Obama, Democratic Sen. Carl Levin and Republican Sen. Norman Coleman last year.

"Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system, robbing the Treasury of more than $100 billion each year, and shifting the tax burden from high income persons and companies onto the backs of middle income families," Sen. Levin said.

"We all know there are billions of dollars in taxes that are owed but not paid each year. It's called the tax gap. The latest estimate is $345 billion in unpaid taxes each year owed by individuals, corporations, and other organisations willing to rob 'Uncle Sam' and offload their tax burden onto the backs of honest taxpayers.

"We estimate that, of that $345 billion annual tax gap, offshore tax haven abuses account for as much as $100 billion. Abusive tax shelters, both domestic and offshore, account for additional billions in unpaid taxes per year. To pay for critical needs, to avoid going even deeper into debt, and to protect honest taxpayers, we must shut these abuses down."

Only last month, Bill Clinton's former US secretary of commerce and trade representative Mickey Kantor warned delegates at the Bermuda International Business Association annual general meeting luncheon that if America's economic woes drag on into next year, Bermuda had better "watch out" for possible changes to the US tax system that could impact on the Island's international business sector.

David Ezekiel, chairman of the Association of Bermuda International Companies (ABIC), said it was ultimately up to the new incumbent to choose what path to take on the matter, but they should recognise the part Bermuda's re/insurers played in helping recover losses in such disasters as Hurricane Katrina.

"You cannot ever get sanguine about it, but every time there is an election somewhere, this is usually one of the topics that comes up and really, in the end, you often find that once the election is over, the impetus is not quite there and one of the challenges is to decide whether to overhaul the structure of what has worked well for both sides," he said.

"If one takes a look at how quickly the Bermuda insurance market responded to what happened with Katrina and what huge percentage of that loss was paid by this market, they will realise how important it was to those on-shore.

"I think there are a lot of factors for it. But we are always mindful of this sort of initiative and I think that the dialogue that both Government and the US Consul General have started with politicians on shore is largely to our benefit."

Philip Barnett, president of the Chamber of Commerce, said that while, on a personal level, the Illinois Senator resonates with himself and he considers him to be a strong candidate, he was concerned about his talk of shutting down tax havens.

"From a business side of view, I am actually concerned about how he has said some of his stumping speeches that he would start targeting tax havens," he said.

"Although he has not singled out Bermuda in this, there is a small concern and it bears close watching."