2011 Inaugural Address By The Honorable Sebastian L. Anefal ...

Tax ReformFor our broad reforms to bear long-term impacts we must finalize our proposedtax reform and improve collections and distribution at both the state and nationallevels. This reform should equalize our tax burdens. This should result in tiltingrevenue streams in favor of the state governments and result in long-termbeneficial impacts for our people.Having said that, I intend to submit to the Legislature a much needed modern taxlaw that is necessary to strengthen our private sector, our government and ourpeople. We recognize that passing comprehensive tax laws is very challenging.But a modern tax law is critical if we are to have a strong and vibrant privatesector. We must recognize this necessity for our future. As I have said before, wemust create revenue sources that pay for our own infrastructure needs and thatreplace grant revenues from the United States that currently finance a veryconsiderable portion of our health and education. We must also improve thecapacity of our people to provide essential services, both in the public and privatesectors that will permit the economy to grow and to ensure that benefits flow tothe people. As I see it, we have but limited options of either to increase the taxrevenue by widening the tax base, or reduce public services to an affordable level.The remaining option is the combination of doing a little bit of both options toease the pain.I am committing this Administration to work closely with the state leadership andthe private sector, as well as with FSM National Government leadership, to havethe necessary enabling legislation passed by the end of the year, at the latest. It is19