National taxes on wages and salaries are levied, as well as a business gross receipts tax. The states are constitutionally limited in the types of taxes they may impose; they may levy sales taxes on alcoholic beverages, soft drinks, and cigarettes. The municipal governments usually levy head taxes and boat license and business license fees.
An important tax revenue service is from the sale of tuna fishing rights, which rose from $12.7 million in 1990 to $18.2 million in 1994. In 1999, FSM, Palau, and the Republic of Marshall Islands agreed to cooperate in policing illegal fishing in the region.
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