businesses, a Government senator said yesterday.

Such a radical move would help Bermuda through a recession in which the name of the game was survival, said Sen. Jerome Dill.

Speaking at a Rotary Club lunch, Sen. Dill said the international business side of the economy was not doing too badly. But it was slowing down.

Despite recent amendments to the Companies Act the Island was "still an expensive and restrictive jurisdiction in which to do business'', he said, and Bermuda found itself continually trying to catch up with rival locations.

When international businesses had a physical presence in Bermuda, Bermudians took up 65 percent of jobs, he said. So more companies should be encouraged to locate on the Island.

"We might like to focus more on the issue of what we're going to do on taxation and international business. One of the greatest impediments to companies setting up business in Bermuda is the cost of doing business.

"We might like to consider our tax structure when it comes to dealing with international business. I am not talking about income tax, but about doing something as radical as reducing employment taxes as they apply to international business.

"The world is changing and we need to understand these changes. The Bermuda business community, working in conjunction with the workers of Bermuda, can forge the way forward.'' The Island's difficulties were more cyclical than structural, he said, and the end of the recession was not far away. The present was a time of challenge and controversy, which would present a test for Bermuda.

"When we can emerge stronger, leaner and more efficient, then I think we will have learned our lesson.'' On tourism, Sen. Dill said the industry should not concentrate on discouraging figures measuring hotel bookings, because tourists no longer booked two or three months in advance.

Bermuda could weather the storm by showing the kind of confidence in itself that airlines had shown in Bermuda, he said. It should follow the example of Virgin, which admitted its London flights would take longer than BA, but which hoped to provide a better service.

"We should be in the business of providing value for money and a superior level of service. We can't compete with the room rates offered in the States, but what we can do is enhance the level of service. We can make our visitor feel important by giving more and including more in our room rate.'' He said he had spoken to a number of Front Street businesses, and tourists were not spending.

"One suggestion, which is not a new one, is that we must simply change our philosophy on Front Street when it comes to how long we're going to be open.

This is the only tourist destination which closes down by and large at 5 p.m.

The name of the game is survival and we can't do business as usual. We must be innovative.''