April 29, 2009

FSM Information Services

Palikir, Pohnpei, April 22, 2009, A Tax Reform Executive Steering Committee (ESC) meeting was held in Chuuk on April 16, 2009. The meeting was chaired by the Honorable Vice President Alik Alik and attended by all four State Governors. Honorable Dohsis Halbert, Chairman of Ways & Means Committee for the FSM Congress, also participated in the meeting as an observer.

The objective of this ESC meeting is to continue to discuss and reach agreement on constitutional, legal, and other policy issues related to the proposed creation of a Uniform Revenue Authority to administer the taxes of all five FSM Governments. In particular, the meeting focused on two issues: 1) funding for the URA; and 2) VAT refunds and URA banking.

Leading up to the ESC meeting, a technical group comprised of finance and legal of- ficers from the FSM National Government and the FSM State Governments met. At the end of its two-day meeting the technical group reached agreement on the draft URA legislation as embodying its policy recommendations. During its meeting, the ESC adopted the draft URA legislation recommended by the technical group which includes language relating to VAT refunds and URA funding. Vice President Alik reinforced the administration's commitment to the tax reforms and assured the Governors that the administration will continue to work with Congress on the proposed approach for funding the URA.

Going forward, the technical group will undertake review of the remaining draft legislations relating to the tax reforms. The technical group will have 30 days to complete its review and finalize its recommendations on all of the remaining draft legislation in time for the next ESC meeting, tentatively planned to take place in June.