The government of Norfolk Island says a proposed Goods and Services Tax will help assess the economy.
The secretary to government, Peter Maywald, says most of the government's revenue comes from direct taxes such as customs duty, departure tax and accommodation levies.
But he says such taxes are difficult and expensive to administer.
And he says under the new scheme, to be trialled from December to June 2006, these levies will be axed and replaced by GST which would also help keep tabs on the economy.
"Because we have no income tax system we haven't got very good data on the size of our economy or the GDP. So the main point of the trial would be to assess that. Hitting the rate of 1 percent means people will still have to give return of the total turnover in goods and services but the tax level of 1 percent won't be onerous because we're going to lower customs duty to match that."
Peter Maywald says the new tax will be up for debate in August.