Read our lips: No new taxes.

That is the message from Bermuda's employers to Finance Minister Paula Cox, who will announce her Budget for the 2010/11 fiscal year next Friday.

Bermuda Employers' Council president Graham Redford yesterday said in a detailed statement: "Bermuda must reduce or at least not increase the tax burden on businesses. If Government needs to increase its income, this cannot be done through increased taxation on business. Any such increases may meet immediate budgeting needs but will not stimulate the private sector, and that is where the recovery must start."

In a statement that he said reflected the prevailing view of the BEC's membership of more than 400 employers, he called for a reduction of red tape, for the needs of small and medium-sized businesses to be a Budget priority, highlighted the threat of protectionist measures and said Government had "a fiscal responsibility to try to reduce expenses".

He warned that "non-effective policies" could jeopardise economic recovery and added: "The period of plenty is over and a new age of austerity has arrived."

Mr. Redford's statement appears in full on page 27. Increases to businesses' tax burden could have far-reaching consequences, Mr. Redford told The Royal Gazette yesterday.

"As it stands, most employers are looking at every single expense," he said. "Obviously payroll accounts for a large part of expenses for many companies — 30 to 40 percent in many cases — and if you add another one or two percent to that it gets more and more difficult.

"Already some employers are asking staff to accept pay freezes or, in some cases, reductions and shortened work weeks. This is in the hope that people can remain employed.

"So any kind of increase affecting the bottom line of employers will force them into rethinking their strategy going forward."

Preservation of talent — to ensure that companies and the Island were well equipped to prosper when the economy improves — was also of great importance to Bermuda's knowledge-based economy, he added.

Government faces tough decisions in the Budget, as it tries to balance the need between raising extra revenue counter rising debt and ensuring that it doesn't harm a potential recovery by imposing higher taxes.

Mr. Redford is well aware of the importance of next Friday's Budget.

"Some of the decisions made are going to have far-reaching consequences — perhaps even for generations to come," he said.

"We need to be battening down the hatches and showing innovation and leadership.

"A lot of the situations we are looking at are not unique to Bermuda and we need to look at best practices around the world."