Bermuda business leaders have warned that higher taxes would increase the cost of doing business in Bermuda ? and could even ultimately lead to companies upping stakes and leaving.

On Monday, Finance Minister Paula Cox unveiled the long-awaited "Report on the Bermuda Tax System" which revealed that Government had been looking at ways to raise taxes to 24 percent of gross domestic product back in 1999 when the report was completed.

Taxes currently stand at 18 percent of GDP, and Ms Cox said Government would look at raising taxes by no more than two and three percent at the moment, but would not bring in income tax.

Business leaders, however, are concerned that any tax hikes would make the already high cost of doing business in Bermuda even higher.

"A lot of businesses are here purely because they can save money here because of the tax structure," said Charles Gosling, chairman of the Chamber of Commerce. "And they will look at what they have been saving and the costs and will make a decision accordingly. If they are not saving much compared to the costs, they will look at relocating elsewhere."

And the Bermuda International Business Association chairman Greg Haycock also warned against increasing the cost of doing business.

"As Bermuda operates in a fiercely competitive global landscape, it is BIBA's concern, with respect to any increase in taxes, that Bermuda not become too expensive a place from which to operate," he said.

"We must be careful not to price ourselves out of the market and have potential investors go to our competitors because it costs them less to do business from those jurisdictions."

Financial Secretary Donald Scott said on Monday that Bermuda's taxation levels were still very low compared to elsewhere, where they were as much as 46 percent.

But Mr. Haycock said: "Bermuda cannot be compared to other countries where taxes reach the levels of as much as 46 percent because we do not have costly defence budgets, consular and other similar responsibilities to support."

Mr. Gosling said that the costs of higher taxes ultimately trickled down and it was the consumer who ended up paying more for both goods and services.

"Bermuda is an expensive enough jurisdiction as it is," said Mr. Gosling. And he suggested Government look at additional ways of raising revenue ? such as lowering customs duty on goods and encouraging locals and tourists to buy more because it was good value.

"One way of raising additional revenue would be to lessen some of the customs duty," he said. "This would allow products to be better priced in Bermuda not only to the local consumer but also to tourists."

The long-awaited Report on the Bermuda Tax System by Harry Gutman and Eric Toder was originally commissioned in 1997 by the United Bermuda Party, but it did not release the report before the general election because it was such a sensitive document.

Then when the Progressive Labour Party swept to power, the authors of the report were asked to "improve the progressivity of the overall system of taxation" (which means finding a way getting those with higher income to pay higher taxes, and those with lower incomes to pay lower taxes) as well as increasing tax revenues to 24 percent of gross domestic product.

The report states that Government could raise and additional $54.3 million or 2.1 percent of GDP at 1999/2000 prices, with recommendations that could be implemented together or separately.

After the release of the "Report on the Bermuda Tax System", Opposition Leader Grant Gibbons said that the revelations show that PLP Government was in effect looking to raise between $74 million and $110 million in taxes which would be the equivalent to doubling or tripling land tax at the current rate or a 50 percent increase in payroll tax.