A consumption tax being planned by the Niue government may be set at 12.5 percent.
The finance minister, Fisa Pihigia, says the country is conducting a review because of the international push towards the removal of tariffs and also because of the impact of the country's high income tax rates.
He says a study is still under way into the planned Niue Consumption Tax, or NCT, to determine whether there should be any goods or services exempt from the tax.
Mr Pihigia says the proposal is for the NCT to be 12.5 percent but cabinet has yet to approve that.
"It is supposed to be a revenue neutral exercise. What we lose out on the reduction of [income] tax rates will be picked up by the consumption tax."
Mr Pihigia says pensions for retirees will be adjusted so that they are not adversely affected.