Papua New Guinea's Chamber of Commerce says the abolition of VAT could lead to the collapse of provincial governments.
The chamber's president, Michael Mayberry says local level governments will not be able to collect enough revenue through provincial sales taxes to sustain public services.
Mr Mayberry says the national government is looking at introducing a 50 percent customs duties tax on imported goods to quickly to make up the revenue loss of 154 million US dollars.
He says provincial governments may find themselves bankrupt as a result of Supreme courts decision to abolish VAT.
"A number of the provincial governments will fall over if they don't get the money flowing through and I believe that the moroby provincial government you know because of what the action they have taken will run out of money and they will not be able to afford to pay the public servants"
Michael Mayberry, PNG's Chamber of Commerce