Tax hike slated

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FOREST Minister Douglas Tomuriesa has urged the Government to “rethink” the proposed tax increase on round log exports from 28 to around 60 per cent because it will hit the industry players “hard”.
Tomuriesa said the proposed tax change could lead to operators abandoning most forestry concessions, timber-harvesting rates collapsing and ultimately the Government receiving less export tax revenue.
He said some logging companies had already downsized or halved their employment base because of the low commodity prices and the proposed change in tax.
Tomuriesa urged the Government to rethink its decision on an industry which provides thousands of jobs for rural people.
The proposed change was included in the 2017 national budget handed down in November.
Tomuriesa told The National yesterday the country had been exporting 4.8 million cubic metres annually until last year when it dropped to three million cubic metres. He said the average income from the logging industry was between K500 million and K700 million annually from taxes and other levies.
“What we intend to do this year is encourage the industry,” he said.
“We want to improve the logging industry.
“Our biggest hurdle is the new tax regime introduced.
“Any company that pays around 60 per cent tax – basically that company is gone. In terms of business, you hit somebody with that sort of tax, the company winds up.
“We are hoping the Government in its sense would look at it (tax) and save these companies.
“When they go, we all lose.”
He said normally around February and March, logging companies should really pick up with their exports.
“I would be signing something like 40 to 50 permits every month by now. So far I’ve signed only 12 or 15,” Tomuriesa said.
On whether the Government had consulted logging companies before imposing the tax increase, Tomuriesa replied: “Yes and no.”
“Yes in the sense that some of the tax was done through consultation and some were not. So hopefully the Government can sit down and relook at it,” he said.
“I feel that we have to be fair with the logging industry.
“We have to bring tax down and support the industry if we want it to flourish.”
PNG Forest Industries Association executive officer Bob Tate had earlier said the changes would put at risk a major national industry, greatly reduce government revenue and foreign exchange earnings, which exceeded K1 billion last year.
It could also result in as many as 15,000 locals losing their jobs.

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