By SHIRLEY MAULUDU
THE country must ensure that it has in place, and applies, a consistent set of taxes and duties which apply to all investors, Institute of National Affairs executive director Paul Barker says.
Barker was responding to a statement by Deputy Prime Minister and Treasurer Charles Abel on Government’s plan to “phase out tax holidays” for companies.
Abel said Government had negotiated the tax holidays under certain provisions and agreements with certain companies based on special circumstances. But that will now be done away with.
Barker told The National that the country needed standard investment conditions which applied to all investors, with specific and competitive conditions for the certain sectors, such as mining, petroleum, gas and forestry, but which were then applied consistently and across the board.
“This business of negotiating special deals for individual companies, some of which are quite inconsistent with others, and some of which provide very limited and deferred returns to Papua New Guinea from the utilisation of its natural resources, should be stamped out,” he said.
“Resource extraction should not be approved at any cost.
“If the net benefits are marginal, or even outweighed by the costs (including high risks) and are long delayed, then PNG should not be proceeding with such projects.
“Setting and adhering to sound and stable investment conditions attracts genuine long-term investors.
“This doesn’t require exclusive deals, with extensive enticements, which tend to scare off other investors in that industry, often with a much longer track record of investing in that business in Papua New Guinea.”
Barker said many businesses in PNG also simply by-passed registering for tax purposes “whether company tax, group tax or GST (even though in some cases still collecting GST from customers)”.
“This results in major loss of revenue but also provides unfair competition to other businesses that are paying taxes properly (and minimum wages etc),” he said.
“The recent tax review provided sound guidelines for the government in these areas, but it clearly requires both appropriate and consistent investment conditions and their application.
“This in turn requires commitment and adequate funding for the revenue collecting bodies, to be able to get out and visit, and undertake tax audits on businesses in the smaller towns and operating resource or trading businesses out in the rural areas.”
By SHIRLEY MAULUDU