“…but in this world nothing can be said to be certain, except death and taxes.” Benjamin Franklin
The implementation of the new tax system, Palau Goods and Services Tax, did not go smoothly for everyone on the first day of its implementation.
The day was rife with confusion and complaints, especially from consumers who were seeing an additional increase in taxes.
The new tax was discussed on public radio, public forums, and training focused on businesses implementing the law. The discussion on the impact on the consumer has been brief, with statements saying “it will be one time increase” and that it will be a “slight increase.”
The increases the consumers saw on the first day had many upset and disgruntled over the changes.
For many, the price difference, even a few cents, was quite upsetting. Prices of goods have been going up. The last report by the Ministry of Finance pegged a 13.5% inflation rate for 2022. More noticeable were the increases before Christmas, with some goods nearly doubling in price in larger stores.
Also adding to the confusion was the imposition of the new tax by establishments that were not PGST-registered companies. According to the government announcement, only PGST-registered companies are required to add a 10% PGST tax. Businesses that are not registered must not add 10% to their prices. To do so is in violation of the law.
One person reported a laundromat charging PGST on washer and dryer rates. Another reported a Bangladesh store raising beer prices from $1.35 to $1.50, citing PGST tax.
In a social media post, one man turned over items in another Bangladeshi-operated store and yelled at the cashier for the price increase.
Some businesses imposed 10% on top of their current prices without adjustments. This, according to the Bureau of Taxation and Revenue,” is illegal. The current prices already have at least the 4% GRT embedded or 4% GRT and 3% import, if not food items. These are supposed to be deducted before the 10% is imposed on the price of goods.
There are only about 240 companies that are PGST registered, and the list is found at www.palaugov.pw, with the title PGST Registry. These are the only companies allowed to charge PGST tax.
Director of Bureau of Tax and Revenue Elway Ikeda said that in the first year of the implementation of the tax law, they don’t expect to charge anyone for honest mistakes. They will use this year to help businesses comply with the law, but they will charge those that deliberately violate the law.