Government of the Federated States of Micronesia

Tax steering committee discuss tax reform progress

Palikir, POHNPEI (FSM Division of Tax & Revenue): April 5, 2007 - The Tax Reform Executive Steering Committee (ESC) convened a meeting on April 4, 2007 in Palikir to discuss progress of the tax reform work and consider a number of recommendations presented by the technical working group.

The ESC was established in December 2005 by Presidential Order following the EPIC and Congressional endorsement of the Tax Reform Task Force's recommendations on a package of nation-wide measures to improve the tax administration and the tax system in the FSM.

The ESC was mandated to oversee effective implementation of the tax reforms. The current members of ESC include Vice President Redley Killion (Chairman), Lt. Governor William Tosie (Kosrae State), Governor Wesley Simina (Chuuk State), Governor Sebastian Anefal (Yap State), Lt. Governor Jack E. Yakana (Pohnpei State), and Larry Adams (representing the private sector).

The two-fold objective of the tax reform is to increase domestic revenue generation to compensate for declining compact sector grants and improve the tax system to create an environment conducive to private sector development.

The members of the tax reform technical working group provided a review of progress on the tax reform work. Some of the progress includes the initial drafting of key pieces of legislation, the development of an economic model to estimate the revenue and price impact of the tax reforms, and the development of a high-level implementation plan for tax reform. This work has been developed with the technical assistance from the Pacific Financial and Technical Assistance Centre (PFTAC) and the IMF. The meeting culminated in the adoption of a resolution which among other things endorses the high level implementation plan, requests the appointment of "implementation teams" in each of the states, and gives instructions to the working group on a number of steps necessary to accelerate implementation of the tax reform.

At the conclusion of the meeting, members of the committee thanked Vice President Killion for his hard work and the important contributions he made to advance the tax reforms.