“There’s a misconception that the government is introducing an income tax immediately,” Napat said. “To state it clearly, the government has not passed any income tax policy. Today’s discussions were about ideas — nothing has been decided. If there is anything concrete to consider, it will be brought back to forums like this for scrutiny before the government makes any decisions.”

Napat acknowledged that the topic has stirred debate within the private sector and across social media but urged stakeholders to engage in informed and constructive conversations. “Social media is already attacking the government on this matter,” he noted.

“What we need are more informed discussions. The government is here to listen to your concerns, and we are committed to open and transparent dialogue on any revenue reforms.”

PM Napat also thanked the private sector for its ongoing contributions to the economy, particularly through job creation and Value-added Tax (VAT) payments, which remain a cornerstone of the country’s revenue base.

“I want to thank you — the companies, the private sector — for providing jobs for our people and for the VAT contributions that help sustain our services,” he said.

Napat acknowledged, however, that improving public service delivery remains a “big elephant” that will take time to address.

“We know that improving the performance of the public service is a challenge, but we are working carefully to reform systems and deliver better outcomes for everyone,” he added.

Opening the forum, Deputy Prime Minister (DPM) and Finance Minister Johnny Koanapo highlighted that revenue reform is both a technical and moral responsibility, citing Article 7 of the Constitution. “Every person must contribute, as required by law, according to their means, to the revenues required for the advancement of the Republic of Vanuatu and the attainment of national objectives,” he said.

“If we want to build and modernise hospitals, improve infrastructure, and invest in education and resilience, we must build a stronger and more sustainable revenue system.”

The forum comes at a critical time, with only five years remaining before the conclusion of the National Sustainable Development Plan (NSDP 2030).

Both leaders emphasised that the plan’s success will be judged not by promises but by measurable results when Vanuatu celebrates its 50th anniversary of independence in 2030.

DPM Koanapo outlined a cautiously optimistic economic outlook, projecting real Gross Domestic Product (GDP) growth of 3.7 percent in 2025. Growth will be driven largely by post-earthquake reconstruction and broad-based sectoral expansion, with agriculture expected to grow by 2.7 percent through increased kava exports and diversification.

Industry is forecast to grow by 8.1 percent, supported by ongoing construction and recovery efforts, while the services sector is projected to rise by 3.9 percent, fueled by increased visitor arrivals and targeted stimulus measures.

Despite this positive trajectory, the DPM warned that real GDP per capita has declined by eight percent since 2011, even as the Pacific regional average grew by over 20 percent. “This tells us we must invest not just in infrastructure but in our people, our institutions, and our resilience,” he stressed.

On the fiscal front, government revenues have already exceeded expectations for 2025, reaching VT27 billion by June, a 42 percent increase compared to the same period in 2024.

However, the country remains heavily dependent on VAT, making diversification and reform critical for building a more resilient revenue base.

Key reforms already underway include the rollout of the Vanuatu Sales Monitoring System, the implementation of a new Revenue Management System, and a comprehensive review of fees, charges, licenses, and tax structures.

These initiatives aim to boost efficiency, simplify compliance for businesses, and create the fiscal space needed to fund essential services and investments.

“This is our opportunity to shape a revenue framework that is inclusive, transparent, and resilient,” the DPM said. “Let us move forward together with courage, clarity, and commitment to the people of Vanuatu.”

Closing the forum, PM Napat thanked participants for their open input. “Thanks to the very frank and constructive discussions today, the government has a clearer understanding of your concerns,” he said.

“We will continue to have these dialogues, because reform is a process — and together we can ensure that our revenue systems are strong, fair, and sustainable.”

SOURCE: VANUATU DAILY POST