Proposals to increase taxes on the professional services sector, including lawyers, accountants, architects and doctors could see each of these categories paying between $500 and $4,000 for an annual licence fee to practice.

The "Report on the Bermuda Tax System" released on Monday by Finance Minister Paula Cox details how to raise an additional $54.3 million or 2.1 percent of gross domestic product based on 1999/2000 prices.

And reforms to include the corporate service providers could see taxes in this area rise by $3.7 million plus $5.7 million raised in new licensing fees.

But there will be a $2 million rebate with the proposed repeal of the corporate services tax, which is a four percent tax on some selected services.

Ms Cox said on Monday when she unveiled the controversial report: "The consumption of goods is, in general, more heavily taxed than the consumption of services."

And the report, which was originally published in 1999 but not published until now, gives ways of balancing out this difference by taxing the service sector or local professionals who are seen to get off lightly from the overall tax burden.

"A comprehensive consumption tax would include both goods and services in the tax base," said the report. "Only the specific services enumerated in the corporate services tax are subject to tax in Bermuda."

And it went on to say that the corporate services tax has been criticised as unfair in its impact and encouraging local professionals to perform services for exempted companies elsewhere.

"Because exempted undertakings, the audit services of accounting firms and many services provided by local banks are not subject to the tax, the tax as a practical matter is born almost entirely by local law firms."

And it added that the goal of the Bermuda tax structure should be a broad-based evenly applied tax on the domestic consumption of goods and services.

"The proposal seeks to implement that goal through a repeal of the corporate services tax and its replacement with and employment licensing scheme," said the report

And it the proposal is for the employers of service providers will be required to possess an employment licence for every covered employee and the corporate services tax would be repealed.

To make things simple the acquisition of employment licences will be co-ordinated with the annual employment survey through a mandatory reporting and filing system.

The license will be valid for a year and will be transferable, and employers have to get a license within 15 days of someone starting with the company.

Included in this category would be hairdressers, draftsmen and women, massage therapists and surveyors. Not covered would be fishermen, agricultural employees or secretarial services, hotel employees or sales employees.

"The proposal is a proxy for the direct taxation of services provided for domestic consumption," said the report. "The taxation of domestic services is recommended to redress the imbalances between the taxation of goods and services in Bermuda.

"A licensing scheme is recommended because, despite the fact that it will require the development of an enforcement structure, the costs of that infrastructure and the attendant compliance costs are less than those associated with a more straight forward tax regime. Moreover, due to its structure, the proposal cannot be avoided by moving the performance of services offshore."

The report acknowledges that the scheme resembles the professional registration tax, but is applied to a wide range of service providers.

The proposal would increase net revenue by about $3.7 million at year 2000 levels, with $5.7 million raised by the license and the repeal of the corporate service tax costing $2 million.