The Shadow Tourism Minister has backed hotel operators' calls for a moratorium on payroll tax, and wants Government to go further in this year's Budget.

Opposition Senator Michael Dunkley said he welcomed greater consultation between employers, unions and Government, but that Ministers could do more to help the man in the street.

He said the global economic downturn will filter down through tourism to restaurants, bars, taxis, retailers and other industries.

As such, Sen. Dunkley said Government should also examine payroll tax breaks for smaller businesses. Earlier this week the Bermuda Industrial Union met with hotel employees and general union members to address 'the economic challenges facing Bermuda'.

The Fairmont Southampton has already axed 35 jobs, 15 of which are redundancies, and hoteliers across the Island are anticipating a drop in occupancy of up to 30 percent this summer.

It is understood hotel owners are now negotiating with Government for a break in payroll tax until the recession is over.

Asked if he would like to see tax cuts for smaller businesses, Sen. Dunkley said last night: "Most definitely, yes.

"Payroll tax is something all businesses should take a look at because in times of economic trouble, whether you are a hotel or restaurant, or the construction industry not being able to keep people on, everyone will be looking to make savings.

"Employers will look at pruning the payroll, so by paying less payroll tax this will help to keep people employed."

Sen. Dunkley said: "In this year's Budget I hope Government will tighten its purse strings and offer some relief to the economy in general.

"I am calling on Government to see if it's possible to reduce some taxes, and hold the line on taxes across the board. The UBP has said for the past two years that Government has overtaxed payroll, resulting in hundreds of millions in extra revenue.

"I would like to see Government consultants, travel and unnecessary purchases cut back in this year's Budget, and for those savings to be passed on to the taxpayer, by putting more money in their pocket. I would like to see payroll tax breaks, as long as businesses make sure those savings are put forward to the benefit of employees, to make sure they continue to be employed through this difficult period."

Sen. Dunkley added: "But I am very pleased the Bermuda Hotel Association, Government and the unions appear to be really communicating and trying to address this issue. I believe Bermuda will weather the storm, but this depends on us as a community and various groups such as these organisations and Government pulling together. Everything should be on the table.

"This is a real broad-brush economic problem, not just with the tourism industry. It impacts on everyone."

The Chamber of Commerce and Bermuda Small Business Development Corporation and were unavailable for comment on the payroll issue yesterday.

Premier and Minister of Tourism Ewart Brown did not want to comment on Government's position towards the hotel industry's request. "At our meeting last week we decided that we would establish a small working group," he said. "That group is working already and I think it would prejudice the environment if I was to indicate what my personal thoughts are on the matter."

But Dr. Brown added: "I believe this is another example of the Government and hotels working together to bring relief to the hotel industry."

Meanwhile, E. Michael Jones, Tourism Board chairman, said: "I certainly feel our bookings will be off this summer, with the economy the way it is.

"I think we can expect to have lean times and we need to do whatever we can to attract more visitors."