Bermuda faces higher taxes, with across the board increases of between two to three percent ? but income tax is not on the horizon, according to Finance Minister Paula Cox.

In revealing the long-awaited ?Report on the Bermuda Tax System? by Harry Gutman and Eric Toder, Ms Cox said that Bermuda?s current tax system brings in a tax revenue of about 18 percent of gross domestic product.

But the Gutman/Toder team was given instructions by the Progressive Labour Party back in 1999 (when changes were made to the original report) to find ways to raise taxes to become 24 percent of gross domestic product.

Ms Cox said that Government had no intentions of raising taxes to this level ? but instead would like to see the level of taxes raised by between two and three percent to between 20 and 21 percent of GDP.

Many countries have taxes which reach the levels of 46 percent of GDP, said Financial Secretary Donald Scott, which meant that the increases still left Bermuda in the low tax bracket.

The report 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.

When the Progressive Labour Partly 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 an additional $54.3 million or 2.1 percent of GDP at 1999/2000 prices, with recommendations that could be implemented together or separately.

The 150-page document has been shrouded in secrecy until yesterday and both the UBP and PLP members of Parliament have called for it to be made public.

Ms Cox said yesterday that the decision was made to make the document available to the public so that there could be a wider public debate, and the PLP was not bowing to any pressure by making the document public.

?In light of the heightened interest in matters of fiscal policy and tax policy, Government considered that the discussion of these important matters could be usefully informed by the report,? she said. ?Readers and researchers will find that no major structural changes to Bermuda?s tax system were recommended.?

Ms Cox said that the original parameters of the report had not been changed by the PLP, which were to:

Examine Government?s continued reliance on consumption-based tax.

Consider the appropriateness of the burden of taxation on different sectors of the economy.

Consider retail sales or value added taxes as a substitute for or a compliment to customs duties.

Report on other taxes that may be appropriate to Bermuda?s economy.

Consider the appropriateness of then current tax incentives.

In conducting the review the consultants were requested to operate within the following parameters:

1) No change in the ratio of taxes to gross national product.

2) Simplicity of tax administration and compliance.

3) No personal or corporate income tax.

4) Promotion of horizontal equity and a level playing field among economic sectors.

The consultants said in the report that the consumption of goods was more heavily taxed than the consumption of services, that the payroll tax favours small over large firms, the burden of tax is proportional across all income groups, retail sales and value added tax are unsuitable for Bermuda, the land tax system is too steeply graduated, and customs duties are a low cost and efficient way of collecting consumption taxes.

?Once interested parties have had an opportunity to review the report and assess the recommendations against current tax policy, they will see that Government has acted on some of the recommendations and further work remains to be done,? said Ms Cox.

?For example, the assumed remuneration option in payroll tax was removed in 2000 and the relative contributions of customs duty and payroll tax have changed in accordance with the recommendations.?

She said that Government continued to review other recommendations in the report as some of them ?may become more feasible as our economy further develops?. ?Clearly, however, any major changes will require consultation with our social partners as we chart our way forward in the ongoing development of tax policy and the implementation of a fairer, more broadly-based and more equitable tax system.