Burden of income tax makes saving a dream

Letters, Normal

The National, Thursday July 4th, 2013

 HAS Don Polye read that PNG is one of the top 20 countries in the world with high personal income tax? 

Eighty-five percent of the population is rural-based with the other 15 percent scattered around towns and cities.

Most probably, just 10 percent of the urban population make up the national workforce. Of this, just five to six percent are earning taxable incomes. 

With most government services and infrastructure lacking in rural areas, it is hard for the rural population to engage in income generation, resulting in poverty. 

The government does not have the mechanism to manage and channel funds or see to it that actual projects get off the ground because of a poorly-performing public service.

Just consider someone earning K400  who is subject to 15 percent tax.

He or she would be taxed about K57  leaving K343 which would then be reduced by  seven percent to NASFUND. 

That would be around K24 leaving the taxpayer with K319 for two weeks.

On K319 a fortnight, a breadwinner with three schoolgoing children to feed and clothe as well as other essential family commitments, would be forced to borrow from loan sharks as banks do not give out loans that easily.

This forces low income working people into debt and poverty. 

It is even worse for high income earners as they are  taxed at 42 percent which is nearly half of what they earn. 

Polye, it is only you and the NEC who can help here by reviewing the current tax regime.

Personal income tax could be reduced by increasing the current tax-free threshold from K10,000 to K45,000 or K50,000.

You can also abolish 

tax on overtime, on allowances and entitlements.

Increase the current 0.2 percent concessional re-bate, where a declaration is lodged, to between 30 and 50 percent.

I am sure you can cover the shortfall by putting in measures to collect tax effectively from the business sector.

Some shortfalls would also be offset when the LNG production comes on-line, boosting revenue.

You have asked Papua New Guineans to save but if you cannot help in making people realise your wish, it defeats your concept of a savings culture.

If this government is for the people, as most of you are preaching, then please practice what you preach. Relieve us from the current tax burdens.


Shane Lanea

Port Moresby