The retail sector is awaiting today?s Budget with a mixture of apprehension and hope: apprehension over possible increase to the costs of doing business; and hope that Customs duties will be cut.

While individual businesses have reported improved sales since the closure of Trimingham?s/Smith?s last year, Somers Cooper, co-chair of the Retail Division of the Chamber of Commerce, said the underlying causes for the failure of Trimingham?s/Smith?s remain and the sector would like to see these addressed in today?s Budget.

He said retailers feel they carry a disproportionate amount of the tax burden in general compared with other industries in Bermuda. The cost of doing business in Bermuda ? payroll, duty, insurance, taxes ? increases annually, he said, noting that these costs grow at a faster pace than store prices can be realistically increased.

?Prices cannot rise to cover increased costs since we not only compete amongst ourselves but also with the internet, catalogues and a well travelled population,? he said.

?Locals and tourists are price sensitive to a point. Profit margins have suffered as a result over time.?

He said duty is the number one problem plaguing retailers, not least because current rules require retailers to make upfront payments of large sums of working capital even though they may not see a return through the sale of the merchandise for many months.

?A different system of either reduced duty rates, deposit requirements or a sales tax would encourage newcomers to enter the market and enable existing businesses to grow,? he said.

The retail sector continues to hope that eight years after they first took office, the PLP government will finally come through with the promise it made in the election of 1998 to introduce Duty Free Shopping.

?Bermuda could better compete with other ?Bermuda could better compete with othertourist destinations and enhance our tourism product,? he said. ?If there was incentive to do so, retailers wouldn?t be turning away from the seasonal business which seems to get shorter every year. Like restaurants and hotels, a duty concession on physical improvements to existing businesses could provide additional incentive for retailers to create a better and more appealing atmosphere,? he said.