Business leaders are hopeful that Government will give companies a break this year ? one they feel is well deserved after bearing up under heavy increases in taxes and fees in recent years.

Whether they get that wish or not will be revealed when the new budget is unveiled next month.

Finance Minister Paula Cox will be aware of how stretched businesses already feel they are ? active lobbying of the Finance Ministry will have driven that message home. But, despite this, there are concerns from some in the business community that the corporate sector could once again be left holding the bag for increased Government costs.

Chamber of Commerce president Charles Gosling said: ?Unfortunately there is the belief that additional costs can be put onto businesses and somehow they are absorbed.?

In the last year alone, Island businesses saw their tax burden increase significantly with Government raising the payroll tax rate on employers alone by 0.75 percent ? pushing the total level up from 12.75 percent to 13.5 percent.

This effectively left businesses with total payrolls over $200,000 paying out 9.5 percent more in contributions ? a move estimated to increase the funds flowing into Government coffers by $12 million. That followed a windfall to Government of some $20 million more than expected in payroll tax receipts in the 2000/2001 fiscal year.

On top of that, exempt company management saw their tax level increase when a salary cap previously set at $225,000 was raised to $235,000.

In addition, other Government fees jumped five percent.

This is all against the backdrop of businesses having to grapple with what they say are increased costs across the board, with the inflation rate going as high as 3.9 percent in September this year. A case in point for higher costs was medical insurance premiums ? a cost shared between employer and employee ? jumping an average of 17 percent this year.

And the Island?s insurance companies were also hit this year with increased licensing fees ? a payment that does not go directly to Government, but to regulatory body the Bermuda Monetary Authority. That meant, for example, that class four firms ? the most highly capitalised insurers or reinsurers ? saw their annual fees increase from $25,000 to $55,000.

Despite the tough economic climate, there have been those in Government who have continued to call for businesses ? and particularly the international business sector ? to pick up more of the tab.

Mr. Gosling said: ?I am absolutely dumbfounded that there can be parliamentarians suggesting in today?s economy that that can be possible.

?I guess having had that comment made by parliamentarians we need to do more to plead our case,? he added.

Other business leaders, including Bank of Bermuda CEO Philip Butterfield and Cable & Wireless (Bermuda) CEO Eddie Saints, have also made public calls on Government to tread carefully when adding to the already heavy load carried by businesses.

Mr. Saints said, when speaking at the Bermuda Employers? Council annual general meeting as he stepped down after three years as BEC president, that he was shocked to find that some small business owners were paying more in taxes than they were actually making. And Mr. Butterfield, the keynote speaker for the event, said he was concerned that the international business sector was seen as the Island?s ?holy grail?.

?There is also a certain amount of complacency within Government in terms of how much more can be squeezed out of the corporate sector,? said Mr. Butterfield, the brother of Deputy Premier Ewart Brown.

Despite the warnings, Opposition Leader Grant Gibbons predicts that Government is likely pass on higher costs to the business community when the budget is tabled.

Specifically, Dr. Gibbons said he expected that the rate for social insurance contributions could rise.

?This (social insurance) will probably really bite this year,? he said, pointing out that although a nine percent increase inked for senior pension payments last year had not resulted in higher contribution levels ? with funding coming partly from money the US Government paid to the Island for repairs to Longbird Bridge, and the rest coming from the fund?s principal ? it likely would this year.

?This is likely to be passed on to businesses and employers who could potentially be looking at (increases) somewhere between ten and 12 percent for social insurance,? he said.

Dr. Gibbons said he expected any increases to again be blamed by Government on its ?Social Agenda? ? as it has for the last six budgets.

Although not ruling out other increases, he said it would be ?foolish? for there to be any rise this year in payroll tax levels.

?Government is still benefiting from payroll tax increases in the last couple of years ? that windfall from businesses and employees has kept Government out of trouble for a few years.

?I would think it very foolish indeed to put up payroll tax again. It is already high. I think we are (more) likely to see social insurance go up. What concerns me is whether there will be any other increases in fees that will get passed on to business. We are already a very expensive jurisdiction; I don?t think we can bear much more,? he said.

There was little indication in November?s Throne Speech of what the business community might expect from Government this year. However, international business was recognised as a ?pillar of our economy (that) injects vital capital and a potential additional human resource with a wide range of expertise to assist in the implementation of the Social Agenda.

?Therefore, the well-being of the international business sector will be integral to the success of the Social Agenda.?

David Ezekiel, chairman of the Association of Bermuda International Companies (ABIC), said the Association had had discussions with both the Finance and Labour Ministries through the year, and expected little change.

He explained that ABIC was usually included in any early discussion on significant changes being proposed in the tax or regulatory environment.

?We are currently not aware of any major changes being proposed,? he said, although conceding there were concerns from corporate bosses on the already heavy payroll tax burden.

?Government is aware of our concerns on the payroll tax issue which is proving a significant cost factor for international companies, and is particularly burdensome for labour intensive service companies within the sector such as captive managers, general management companies, accounting firms and law firms ? all of whom are major employers in the sector.

?For these companies the payroll tax represents a significant portion of the bottom line, and the cost is comparable to corporation tax levels in other onshore domiciles and makes it difficult for these companies to remain competitive with other onshore and offshore domiciles. We would hope that the increased revenue to Government arising from increased staff and increased salaries in the international sector will be sufficient to fund the budget requirements,? Mr. Ezekiel said.

Mr. Gosling also pointed out that he, as well as the heads of the chamber?s various divisions, had undertaken dialogue with the Finance Ministry in the months before the budget ? and some of those discussions have already paid off.

A case in point was Government conceding to extend the Amendments to the Restaurants (Temporary Customs Duty) Relief Act 2002. This continues the zero rate Customs duty concession on restaurant refurbishment, or new restaurant developments, beyond December 31, 2004.

?The wisdom of our argument has seen that extended for a few years,? Mr. Gosling said.

And Mr. Gosling said it was hoped that renewed calls by the business community to do away with the ban on most retailers ? who continue to struggle while overseas spending by residents continues to rise each month ? opening on Sundays would also waived by Government.

?Our argument is that we need to be competitive. And our competition is not necessarily the store next door ? what we are saying is we need to have similar service to US.

But he cautioned that concessions helped but costs also had to be contained: ?I just kind of think it is a no-brainer ? higher costs to businesses are higher costs to consumers.?

Until the budget is given, no one knows what changes there may be to how businesses are levied and regulated by Government in 2005, but Mrs. Cox, in a speech at a small business networking event last month, said: ?Well, I am no Robin Hood. Our aim in Government and within the Ministry of Finance is to grow the pie and to take action to expand the opportunities that are available.?