The Marshall Islands Cabinet has endorsed plans to overhaul the tax system for the first time in 25 years.
Cutting taxes for low-income earners, increasing taxes for high-income earners, and eliminating import taxes in favour of a new sales tax are some of the proposed measures.
The Finance Minister, Jack Ading, says the aim is for the new tax plan to be implemented in 2012.
Mr Ading says they are not rushing it because it's a big step.
He says the plan needs to be approved by parliament, the Ministry of Finance's tax collection staff has to be trained, and public awareness raised.
Mr Ading says the new system needs to be fair, benefit low-income families and be user friendly.