The Prime Minister's statement was part of a speech he delivered in Parliament for the second reading of a bill for the IBC law. Under the new act IBCs will be required to submit their identities, addresses and names of directors to the Registrar General's Department.

Mr Ingraham said there would be inevitable consequences for the government's revenue base. He stated: 'There is no question that the amount of revenue the government receives from IBCs will be reduced.' Traditionally IBCs have been a significant source of revenue but this will now change - it is expected that the immediate fiscal period will suffer with a shortfall of around $20m which will result in reduced government expenditure.

Up to December 12 2000, the number of incorporated IBCs in The Bahamas stood at 16,910, with the government receiving at least $250 for each year they operate. The Prime Minister said that Janauary 2001 would normally have been a 'a big, big month for the government in terms of revenue from IBCs, the time when they normally pay their fees. This is not a propitious time to do what we are doing. If we had a choice, this would not be the time. But this is what must be done.'

The bill is one of a series of measures planned by the government in its quest to secure the Bahamas' removal from the OECD's blacklist of so-called "harmful tax havens." One of the major grievances of the OECD involved the slack legislation governing the IBCs in the Bahamas, believing that this could potentially damage the global economy, particularly in light of the secrecy surrounding the identity of IBCs and their directors.

The Prime Minister said that his government was prepared for some IBCs to make the decision to either liquidate or leave the Bahamas: 'We do believe that in our part of the world, it is going to be difficult for any country to sustain a position that allows businesses to be attracted to it, on the basis that regulatory requirements in one jurisdiction has chased them out and caused them to come to another jurisdiction.' He assured Parliament that he foresaw no problems with the Bahamas' banks and trust companies accepting the new IBC legislation, but if bankers became difficult his administration would place them on a "must-watch" list.