Vanuatu's Minister of Finance says the controversial debit tax is necessary to help cover a growing deficit.
Sela Molisa says the debit tax, which starts at a ten cent levy on bank transactions of ten US dollars is expected to raise over 60 thousand dollars in revenue.
Mr Molisa says that the money is necessary to keep public services, especially in the outer islands, operating.
His comments come in the lead up to a rally opposing the tax organised by Chiefs and NGOs in Port Vila this week.
Critics say the debit tax will penalise low income earners and destroy Vanuatu's reputation as a tax haven.
Mr Molisa says money is needed to boost public services which are unable to cater for the country's fast growing population
"Vanuatu's population grows at 2.6 percent per annum and demand for government services is so high and the economy last year there was a growth of 0.2 percent so we have this big problem - the deficit in the budget. So we are faced with this situation, it's very very grave and we have to raise money to continue to provide services otherwise things will come to a stand still."
Sela Molisa, Vanuatu Minister of Finance