PALIKIR, Pohnpei — November 14, 2025 — Vice President Aren B. Palik convened the fourth meeting of the National Task Force on Tax Reform to review progress on key initiatives and strengthen collaboration toward coordinated, transparent, and evidence-based tax reforms across the Federated States of Micronesia (FSM).

The meeting highlighted the Non-Communicable Diseases (NCD) Bill, currently before Congress, which proposes adjustments to import duties on tobacco, alcohol, and sugary beverages while reducing duties on essential goods. Vice President Palik underscored the measure’s dual purpose of improving public health and creating a more stable revenue framework.

The Task Force also revisited the Value-Added Tax (VAT) proposal, engaging in constructive dialogue on constitutional and policy considerations across the States. Members agreed to explore legal and practical solutions that could make its implementation constitutional, feasible, and equitable. As a percentage of GDP, the FSM has one of the lowest tax rates in the Pacific, but the impact of any tax increases should be carefully analyzed before they are implemented.

Participants reaffirmed that meaningful nationwide reform requires active engagement from all four States. Public education and consultation were identified as essential steps to build understanding and support for reforms.

Vice President Palik thanked the Task Force for its continued collaboration and reiterated that consultation with State Governments is essential before advancing major reforms. He emphasized that public engagement and clear communication are key to ensuring reforms are well understood and responsibly implemented.

The Task Force will continue reviewing tax proposals and coordinating upcoming consultations with State leaders as part of its roadmap toward a more effective and equitable tax system for the FSM.

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