Government's move to relax restrictions on work permits received a big thumbs up from the Chamber of Commerce, but members feel the policy is still a drag on the economy.

With Government struggling to make ends meet after last year's global downturn, the Chamber is hoping the new Budget, which will be unveiled next week, won't include increases in import duties.

Sheila Lines, vice president of the Bermuda Chamber of Commerce, said her organization welcomed the move announced by Immigration Minister Lt. Col. David Burch last week.

Lt. Col. Burch said: "Work permits for a number of those exempted from term limits will shortly be made available for longer periods than the current maximum of five years."

It means those in the exempted categories will be allowed to stay longer than 11 years. People in non-exempted categories will still be limited to six years.

Ms Lines said: "We are pleased that Minister Burch recognizes this is a key issue for many businesses and welcome changes to the policy that move towards removing concerns on the economic impact of the policy.

"However, we recommend that the minister and Cabinet continue to evaluate the downside of the policy on the economy and its effectiveness in achieving the upside public policy goals of Bermudian employment."

She emphasized that qualified Bermudians should always be given first preference before hiring a foreigner.

"The Chamber supports employment for Bermudians and believes the requirement to advertise positions and only seek work permits where no Bermudian or spouse of Bermudian qualified for the role has applied ensures preference is given to Bermudians," she said.

Ms Lines added Government needs to address declining tax revenues with public expenditure.

She said: "Increases in import duties would adversely affect our struggling retail business sector. Increases in payroll tax will encourage employers already under severe pressure to shed more jobs.

"However, some tax bases are less likely to impact unemployment further. For example, in the Cayman Islands work permits for senior level staff members generate significant revenues for the Cayman government.

"While real estate stamp duty increases likely decrease total government revenue as they decrease the transactions in the market, particularly the 25 per cent stamp duty rate for non-Bermudian purchasers of houses and condos to 18 per cent in a market where in both cases turnover has decreased significantly, increases in land tax rates would likely not have a direct impact on tourism or employment and would increase government revenues.

"Decreases in the 25 per cent stamp duty rate for non-Bermudians could stimulate transactions and increase government revenue without increasing the amount of land held by non-Bermudians given the current restriction on sale by Bermudians to non-Bermudians.

"As a country we must expect changes to taxes for the government to balance its budget, however unwelcome. We advocate they be selected carefully to not depress economic activity and particularly jobs.

"As a country it is also reasonable for taxpayers to see their tax dollars being wisely spent. Thus far the government has not met their own self-imposed expense reductions and we question the effectiveness of financial controls within government to ensure budgets are adhered to."

She pointed to the number of people hired by Government as unsustainable.

"Further growth in the government payroll as a percentage of total employment income for Bermuda is simply unsustainable as Government's largest source of revenue to pay its employees is payroll tax collected from the other employment sectors."

Ms Lines said the most important thing Government can do to stimulate the economy "is ensure that its actions and communications encourage businesses to come to Bermuda rather than competing jurisdictions.

"Secondly, we would encourage government to continue with concessions and assistance for the tourism industry. There is no easy or quick recovery in sight for tourism."

She also called on Government to set an example of "fiscal responsibility" on expenditure and to weigh carefully the economic impact of any tax changes.