PALIKIR, Pohnpei — December 23, 2025 — The National Tax Reform Task Force (NTRTF) has successfully concluded its nationwide consultations across the four states of the Federated States of Micronesia (FSM), marking an important step forward in ongoing efforts to strengthen and modernize the nation’s tax system.
Chaired by the Honorable Aren B. Palik, Vice President of the FSM, the Task Force conducted consultations in Kosrae, Chuuk, Pohnpei, and Yap, engaging state leaders, traditional leaders, community members, and representatives from both the public and private sectors. These consultations provided an inclusive platform for open dialogue, allowing stakeholders to share perspectives, raise concerns, and contribute recommendations related to tax reform and domestic revenue mobilization.
Discussions focused on key issues including public awareness and communication, system implementation, potential impacts on citizens, and the relationship between proposed reforms and state-level excise taxes. The Task Force clarified that the proposed Value-Added Tax (VAT) would not interfere with state-imposed fees and emphasized that improved revenue collection would enhance the government’s capacity to fund essential services such as climate change, healthcare, infrastructure, and social programs.
Vice President Palik underscored the importance of broad-based engagement, noting that effective and sustainable tax reform must be informed by the voices of citizens, businesses, workers, and state governments across the nation.
The consultations highlighted the need for strong coordination among the national government, state governments, and the private sector to advance shared economic and development objectives.
Pohnpei State leadership reaffirmed its commitment to constructive dialogue and to ensuring that any reforms promote economic growth, fairness for taxpayers, and improved public services.
Yap State leaders expressed support for reforms that serve the nation’s long-term interests, stressing the importance of robust public education prior to implementation. Further dialogue with the state leadership and its people, vis-à-vis constitutional requirement, will be prioritized.
Leaders in Kosrae and Chuuk similarly voiced their support, recognizing the potential of tax reform to strengthen the economy and enhance government service delivery throughout the FSM.
The Task Force expressed its appreciation to state governments, community leaders, and participants for their active engagement and valuable input. Feedback gathered during the consultations will inform the Task Force’s final recommendations, which aim to establish a fair, efficient, and sustainable tax system that supports national development while respecting the FSM’s constitutional framework.
Further updates on the Task Force’s work and next steps will be shared as the review process continues. All parties reaffirmed their commitment to continued collaboration and outreach to ensure a smooth transition toward a more transparent and effective tax system that benefits citizens nationwide.
