a good way to recoup some of the revenue Bermuda has lost through the drop in visitor arrivals, a Government Minister said on Saturday.

Finance Minister Grant Gibbons was speaking on plans to raise the licence fee a foreign purchaser must obtain from 20 to 22 percent of the purchase price.

He said the fall in air arrivals had a knock-on effects on hotel occupancy tax revenues and Customs duties. This increase would not affect the "average Bermudian'', he said.

It was difficult to predict how much revenue the tax would raise, he said. In 1994/95, foreign home sales totalled nearly $43 million, and Government collected about $8.5 million in licence fees. A two percent hike that year would have garnered close to $900,000.

Government plans to repeal a "capital gains tax'' on the sale of foreign-owned homes will be debated next week and were not approved on Friday as reported in Saturday's newspaper.

Luxury home sales tax approved From Page 1 cost of a licence fee a foreign purchaser must obtain to 22 percent of the purchase price from 20 percent.

"The real purpose of this increase is to safeguard the revenue base in 1995/96,'' Finance Minister Dr. Grant Gibbons said.

The Opposition did not vote against the increase, but Shadow Finance Minister Mr. Eugene Cox said Government should present a proper report on why the increase was needed. "If we tend to tax in a random fashion, we may well find that we harm ourselves in the long run,'' he said.

The increase is to take effect on or after January 1. The 15 percent rate for condominium purchases was not affected by the change.

Dr. Gibbons said the increase was made reluctantly after consultation with the real estate arm of the Chamber of Commerce and others.

When the fee was increased to 20 percent from 15 percent several years ago, "there appeared to be no affect whatsoever'' on the luxury real estate market, he said. Sales had increased each year until this year. "There has been a reasonably large fall-off in the current year, which we attribute to some uncertainty about the future of the economy and other things,'' Dr.

Gibbons said. "That has now started to change again.'' After 15 sales last year, there had only been three foreign home sales in 199 5/96, but five others were in the works.

Foreign purchasers are restricted to choosing from among about 250 luxury homes with high annual rental values (ARVs).

Government backbencher Mrs. Ann Cartwright DeCouto said she viewed the increase "with some dismay.'' In 1994/95, the revenues raised by the 20 percent licence fee exceeded budget projections, she said. That was a good thing and it must have been related to the volume of homes sold. "I regard this as a disincentive to foreign purchasers of real estate in Bermuda,'' Mrs.

Cartwright DeCouto said.

Further, Dr. Gibbons had not said how much money the increase was expected to raise this year. And what would be the effect on the five sales that were in progress but had not yet closed? Works & Engineering Minister Mr. Leonard Gibbons , who declared his interest as a realtor, said he supported the increase.

"This market has been fairly active,'' Mr. Gibbons said. "It's been a little slower in the last 12 months for other reasons rather than (lack of) interest from abroad.

"I don't think that the modest increase of two percent is going to affect the sales of these properties,'' Mr. Gibbons said. "Many of these properties increase in their value by more than that per annum.'' Continued in Monday's paper