owners of luxury homes was yesterday blasted.

And the Opposition and business interests combined to warn that the price increases could spell the death knell for businesses already struggling with declining tourism figures.

Shadow Finance Minister Grant Gibbons said the bid to raise the revenue from land tax was at odds with Progressive Labour Party pre-election and Budget promises on tax.

He added: "The Minister of Finance's credibility is in serious jeopardy -- he's implemented a $7 million increase in land taxes which is effectively a 25 percent increase in the whole land tax base.

"It's concentrated on business and higher end properties -- but both before and after the Budget, Finance Minister Eugene Cox said there would be no new taxes and no real increases in existing taxes, except for inflation.

"He also indicated the Budget programmes would be funded from growth in the economy, which would generate revenue from the existing tax base.'' And Dr. Gibbons predicted: "What this tax increase will do is increase the cost of doing business in Bermuda for both local and international business.

"It might also impact on our tourism business through the hotels and because a lot of tourists come here and rent higher end homes. Maybe it's a down-payment on Chelston or on the more than $10 million we have already seen in two supplementary estimates just three months into the new Budget year.

"Or maybe spending has just got totally out of control and he feels he has to raise considerable extra revenue.'' Government said on Wednesday that it would raise an extra $6.9 million from land tax from the first revaluation of Annual Rental Value in a decade.

Mr. Cox admitted owners of luxury homes and the commercial sector would bear the brunt of increasing revenue.

But Mr. Cox said 75 percent of land tax payers would pay less, with the rate of tax payable in all five land tax categories reduced, while the tax bill for private homes will get a 60 percent discount on the tax calculated.

Pensioners will also get a break, with the tax-free portion of their Annual Rental Value being increased by $10,000 to $30,000.

Dr. Gibbons said: "While the broader public may feel they're escaping because land tax is being focused on business and higher end homes, this isn't altogether true.

"We all know business in many cases has to pass increases on in higher charges and costs, whether it be retail or services.'' Land tax to hit businesses David Hamshere of Tess Ltd., which runs branches of the English Sports Shop, Archie Brown, Aston & Gunn and other stores, is on the executive of the Tourist Retail Division of the Chamber of Commerce.

And he said: "While we don't know what the new tax rates will be, we view with a lot of trepidation the fact that it's the higher tax bands and commercial properties where we will see the increase.'' Mr. Hamshere added: "Even if they do not increase the rate, we would certainly still be looking at something quite substantial.

`It's ironic the Government announcement was in the paper on Page 2 just above another story saying retail sales had fallen.

"That's going to become even more of a problem for us if we're the ones who are targeted, as it appears.'' And he warned: "Certainly, for all the businesses which are marginal, something like this could cause them to ponder the reason for staying in business.

"For these people who own their own premises, it's a difficult thing to absorb these kind of increases when there is really zero on the bottom line.

"And that is the fact of what is happening in most of the tourism-orientated businesses in Bermuda.'' Mr. Hamshere added: "The hotels, with their large premises, must be looking at this as well. There has to be some relief somewhere.'' And John Harvey of the Bermuda Hotel Association said his organisation would be seeking a meeting with the Minister if the new tax rate bit too hard.

He added: "If there is to be a significant negative impact, then we will make every effort to address that with the Minister of Finance.

"In our meetings with Government, they have been sensitive to our financial challenges -- and if this is to be another expense at a time when we can ill afford it, we hope they will be sensitive and make sure that doesn't occur.'' Buddy Rego, one of the vice-chairmen of the Real Estate Division of the Chamber of Commerce, predicted a major tax hike would make commercial property harder to move -- especially retail property.

He said: "On the business side, it's horrendous, primarily because a large part of Hamilton's business buildings are devoted to retail operations and as such, it's that sector which will be most affected to their detriment.'' And he said a rental-based system was very variable and could hit homeowners who do not rent their property hard if the market fell rapidly -- as it could do.

Mr. Rego added: "There are a lot of people in Bermuda who don't have the income to support that -- property rich and cash poor.'' Mr. Cox was yesterday off the Island and could not be contacted for comment.

David Hamshere