Bermuda's boat dealers have been dealt a big blow by Government's decision to raise duties on boats from 33.5 percent to 55 percent.

The increase in duties was introduced by Finance Minister Paula Cox in last Friday's budget and is set to have a significant impact on and wide reaching implications for the way the Island's marine industry does business and operates in the future.

The last time duties on boats were raised to such high levels was by the United Bermuda Party (UBP) 20 years ago, but, having seen the effect it had on the marine industry, it quickly backed down and cut them to 33.5 percent barely two years later.

Lyle Douglas, manager of Marine Locker, said the new duties would make life even more difficult for boat dealers, who already incur a high level of taxation.

"The marine industry, from a retail standpoint, is one of the most heavily taxed," he said.

"This has basically added 20 percent to our overheads and we are a small Bermuda business and it is just deadly for us. And the other thing is them (Government) acting like people going on the water is a privilege and a luxury — it is as if it is something only the rich can do and now they are ensuring that.

"Even duties on rowing boats are 55 percent — it does not make sense."

He claimed to have potentially lost four new boat sales as a result of the newly-implemented duties.

"People are dropping like flies," he said. "They (Government) want to give us duty relief for renovations. What for? For a cosy showroom with no boats in it? They have just made it much harder for us."

John Trimingham, owner, president and chairman of Peppercorn Marine, agreed that the new measures would have a negative impact on boat sales.

"It is not like we are reinventing the wheel," he said. "The UBP did this 20 years ago and it proved to be a very short order that they were losing revenue and it only lasted two years and then they put it back to 33.5 percent and boat sales took off immediately.

"I was told by someone who was apparently in the know that the next year generated more income than the previous two years, which sends out a pretty clear message." And he reckons it will have a trickle-down effect on the rest of the industry.

"The trickle down is not just better sales, it trickles down through the industry to people who sub-contract who paint boat bottoms and wax boats," he said. "They (Government) are shooting themselves in the foot.

"I cannot see that 20 years has changed the outcome of it that much — it is just people making the same stupid decisions."

Mr. Trimingham said he had not lost any sales immediately due to the new duties, but he believes that new boat owners may now be reconsidering their options.

"I have not had anybody back out yet, but it is safe to say that the new people to it are re-thinking about making commitments and it is a lose/lose situation and nobody gains anything," he said. "They do not generate any revenue and they are stifling the industry.

"But the Bahamas set a wonderful example 20 years ago — they adjusted duties from a similar level to what it was here to five percent and their marine industry has absolutely blossomed — they have marinas and people selling boats and down there, they have an entirely new industry."

Meanwhile Alan Brooks, general manager at PW's Marine denied that the new duties would mean the death of the marine industry and that boat dealers would find a way to survive.

"I think the company will go on — I don't think we are going to go to the wall," he said. "We are an Island nation where one of our major areas is sport and recreation on the water and I think it will reduce the number of people able to enjoy the marine environment because they will be less well equipped to buy a boat.

"I think from an industry point of view, businesses will survive."