An Opposition MP in Niue says MPs have been told the country is bankrupt and struggling to pay its basic costs on time.
The Government is trying to change its tax structure, but its plans to introduce a National Consumption Tax, or NCT, was deferred late last week after a majority of MPs raised concerns over it.
The NCT is to be set at 12 point five percent and would come with an income tax cut.
Such a tax cut would apply mostly to Niue's public servants, but MP Terry Coe says people are asking about the sense of reducing tax if the country is bankrupt.
"The financial secretary said they are bankrupt or broke and that we need money to run the Government on a day to day basis and at the moment we are struggling to pay the public servants their pay each fortnight."