Call to review current tax regime


WITH high optimism of good things to happen with the promise by the government in making Papua New Guinea a “Rich black Christian nation”, nothing would be more relieving than loosening the strangling wires of the ridiculously high tax garrote that is cutting into the neck of an overly burdened populace.
The call by Oro Governor Gary Juffa to review the current tax regime is timely as it is well and truly founded and should have everyone’s backing.
PNG is one of the highly taxed nations and it doesn’t get better with the widening disparity in income per capita to that of the domestic market value coupled with the ever rising inflation.
A case in point is our current personal income tax rate stands at 42 per cent, which is almost the half of someone’s income.
Personal income tax rate in PNG averaged 42.87 per cent from 2004 until 2018, reaching an all-time high of 47 per cent in 2005 and a record low of 42 per cent in 2007.
In the long-term, PNG’s personal income tax rate is projected to trend around 42.00 percent in 2020, according to our econometric models.
This means there is no indication of tax relief in sight in the immediate and short term hence associated problems to an acutely slashed income will be compounding.
Below is a simplified version of the current personal income tax threshold.
When matching the average income per fortnight with the prices for goods and services in the prevailing market – including rentals, school fees, etc. – you will appreciate the grim reality an average Papua New Guinean face each day.
While taxes are good for the government to pool some important amount of resources internally to fund the budget or finance vital goods and services the review must look across the taxable areas in our tax regime.
There are other places the government may consider raising taxes while giving concessions or slashing personal income tax more considerably.
It’s about time the tax concessions and tax holidays given to large corporations participating in the mining and petroleum sectors be reviewed.
While tax concessions/holidays may be good to attract foreign investment, it shouldn’t be on the expense of the financially crunched low and middle income earners.
The low and middle income earners constitute the back bone of this country which is almost 70 per cent and this includes us the teachers, health workers, policemen and women, warders, soldiers, clerks and office secretaries, middle line managers and blue collar workers including security guards, cleaners, shop keepers, truck drivers, etc.
And making PNG a truly rich, black, Christian nation we will need profound changes in affairs of the country and that mean paradigm shifts in the legislations governing the extractive industry, elections and democracy, tax and tariffs and painful but purposeful reforms and structural adjustments.
It has to be a complete new ball game projected on a higher plane.
I always see Paul Kagame’s Rwanda a model an aspiring rich black nation can emulate.

David Lepi