Overview:
If you’ve noticed that buying snacks at the store or paying for home internet costs more lately, you’re not alone. High prices are hurting many local families, and lawmakers in Palau are trying to fix it. A new group of bills in the Senate wants to drop the Palau Goods and Services Tax (PGST) from 10% to 5% and completely stop taxing food, electricity, and phone bills. Here is what you need to know about the proposed tax cuts and why government leaders are debating them.
Twin Senate bills aim to cut the PGST tax in half and remove extra taxes on groceries, power, and phone bills.
By: L.N. Reklai
KOROR, Palau (Oct. 12, 2026) — Lawmakers in Palau are working on two new bills to help families save money on daily living costs as prices for groceries and basic services keep going up.
The bills were brought forward by five senators—TJ Imrur Remengesau, Stevenson J. Kuartei, Salvador “Sadoi” Tellames, Lentcer Basilius, and Kerai Mariur—who want to change how the Palau Goods and Services Tax (PGST) works. PGST is the extra tax added to items when you buy them at a store or pay a bill.
The first proposal, Senate Bill No. 12-83, wants to cut the main PGST tax rate in half, dropping it from 10% down to 5%. It would also stop the government from charging sales and income taxes to public service companies like the Palau Public Utilities Corporation (PPUC), Palau National Communications Corporation (PNCC), and Belau Submarine Cable Corporation (BSCC).
Senators explained that electricity and phone services are essential for everyday life. They pointed out that “since the implementation of the PGST Act, individuals and families have felt the financial impact of the new tax regime in their daily lives,” making it harder for people to pay their monthly bills.
The second proposal, Senate Bill No. 12-82, focuses directly on food. It would remove the PGST tax from all grocery items—whether raw ingredients, cooked food, or snacks. Lawmakers said this is necessary because “the cost of food has increased substantially, placing a disproportionate burden on low-income households, large families, senior citizens, and other residents with limited financial resources.”
While many local families would love to pay less at the cash register, top government leaders urge caution.
President Surangel Whipps Jr. warns that cutting taxes too much could leave the government without enough money to run public services, fix roads, or run essential community programs. During discussions about tax policy, President Whipps cautioned that “the proposal to reduce the Palau Goods and Services Tax (PGST) while increasing subsidies risks government revenue and stability.”
When discussing broad tax cuts and money-back programs, President Whipps added that “the rebate was an untargeted subsidy that would have diverted public funds away from targeted assistance programs… and provided government money to individuals who do not require assistance.”
This debate leaves Palau at an important crossroads: while senators want to give families instant relief on their grocery and power bills, executive leaders argue that a strong tax system is necessary to keep the country running smoothly. Lawmakers will continue reviewing both bills to decide what comes next.