Government must work to reassure business leaders in order to best arm Bermuda against the threat of "US tax vigilantes".

That was the message from Shadow Finance Minister Bob Richards at a United Bermuda Party public forum on the economy last night. Mr. Richards warned that future US president Barack Obama could damage the Island's economy if he starts to clamp down on so-called "tax havens".

"Generally we don't have an adversarial relationship with the United States but I can tell you it's coming and we need to be ready," he warned. He told the forum that international business leaders, not Government figures, were going to be Bermuda's biggest hitters in the fight against those vigilantes. However, their commitment to the Island is weaker than it used to be due to unpopular policies like the term limit on work permits.

"Just because you see a picture of (Premier) Dr. Brown in the paper with Barack Obama it doesn't mean he's going to even be able to talk to Barack Obama when he's president.

"Our best assets have a shaky approach to Bermuda, so one of the things we can get the Bermuda Government to do is reconnect and firm up international businesses' commitment to Bermuda," he told the 50-strong audience at Port Royal Primary School.

"If you wound back the clock five years everyone would say 'we know they're committed to Bermuda'. Today they're not so sure. ACE Insurance has moved its headquarters to Switzerland. In yesterday's paper we had an article about Flagstone Insurance sending its Chief Financial Officer to Switzerland.

"There've been complaints about international businesses not feeling comfortable in Bermuda, not feeling welcome, and there are moves to replicate what ACE did, I can tell you."

One of the reasons, he claimed, was the policy that puts a six year limit on work permits for most guest workers.

"This term limit policy has got them upset, I can tell you," he said.

Mr. Richards said that "intellectual capital" in terms of talented, qualified people actually working in Bermuda is essential to the Island's economic future, since they make it a real business jurisdiction rather than simply a "tax haven".

"The term limit policy sticks a dagger in the heart of that concept because a lot of those people won't come here from overseas just for six years.

"They've got children at school and it's not going to work. The business can't get the talent they want," he said.

The result, he claimed, would be to turn Bermuda into the tax haven it protests that it isn't – and get it targeted by the US and UK Governments.

Mr. Richards also highlighted the issue of "corporate inversions" where a US company creates a subsidiary and then sets up a headquarters for it in Bermuda.

"This is a really egregious tax avoidance measure, and it hardly provides any benefit to Bermuda at large. Maybe a few lawyers, but it doesn't hire people, not like insurance hires people and it has a knock-on effect.

"It really angers the US tax vigilantes a great deal. One of the things we can do off the bat without being forced to is say we're not going to approve any corporate inversions because it really angers them," he recommended.

The forum was hosted by Charlie Swan, the UBP candidate for the December 4 by-election in Southampton West Central. In addition to Mr. Richards' overview of the economy, the audience also heard from international business consultant Eugene Saunders, who warned that the current downturn could last a year to 18 months.

Shadow Minister for Works and Engineering Pat Gordon Pamplin, a former Shadow Finance Minister, gave a presentation highlighting practical steps that families and small businesses can take to prepare for tough times ahead.