Retailers have long been complaining about the injustices of import taxes on their goods.

When buying clothes they have to take into consideration what kind of fabric is used. With 2.5 percent charged on natural fibres and 22.25 on non-natural, one percent Lycra could put an extra $20 on a dress, and make it too expensive for the local markets.

Many jewellers have also been struggling with keeping prices low. If, like Astwood and Dickinson, they have a contract with a world-wide jewellery distributor, they have an obligation to keep prices the same as other outlets around the world.

The prices have to be the same despite shipping costs and paying 6.5 percent tax on everything they import.

Ian Smith, manager of Astwood and Dickinson, and one of the brains behind the idea of making Bermuda a duty free haven said, it was hard to make ends meet.

"My bottom line is tiny. After you take all the taxes and overheads, then profits are marginal,'' he said.

Among the bargains on the Island are perfume and makeup. But the cheap cost to the shopper comes out of the pockets of the department stores. As they are classed by distributors with other duty free locations in the Caribbean, they are forced to sell items at duty free prices -- despite paying ten percent duty on top of importation costs. "Most of the large department stores make no money on their perfumery departments,'' said Mr. Smith.

Clothes shops also have been feeling the pinch, according to David Hamshere, President of the Tess Group, which owns the English Sports Shop and Astwood and Gunn.

He says that duty free shopping could work, and bring in bargain hunting tourists.

"In Bermuda we have very sophisticated tourists. They know what the price of an outfit is in New York. If I buy that outfit in New York, I have to pay the same price as retailers there, and then pay shipping and tax. As you can imagine, it cost more to buy here.

"But if we buy in Europe, the same designer clothes are cheaper. So even with paying shipping we could a cheaper product if it was tax-free.

"Put simply tax free shopping would attract the buyer to come here.'' TAXES TAX