Commitment showing

THE Government has shown considerable commitment to maintaining the country’s social and economic development, while seeking to fine tune its revenue, expenditure and its borrowing costs, according to audit, tax and advisory services firm, KPMG (Klynveld Peat Marwick Goerdeler).
Commenting on the 2020 National Budget that was presented last week, KPMG highlighted that the Government had shown commendable restraint in not imposing substantial tax increases, with some predicting a GST (goods and services tax) rate increases and increases in personal tax, in an economy that was apparently struggling.
Tax reform measures included the development of a simplified small-to-medium enterprises tax regime to assist the small business sector while bringing them into the tax net and some selective tax changes such as an increase in excise on some alcohol products and log products.
That being said, the Government had flagged potential tax increases in the banking and telecommunications sector and it was understood that they were still considering the imposition of capital gains tax.
However, KPMG stated that one tightrope the Government negotiators would have to walk was to deliver on increased tax contributions it sought from the extractive industries sector while still bringing home the delivery of Papua LNG project, P’nyang gas project and Wafi-Golpu gold mining project, among others.
It was also understood that the P’ynyang and Papua LNG projects were interdependent and industry players would be watching closely.
Meanwhile, the firm noted that with that moving from an adjusted 2019 Budget deficit of K3.5 billion planned pursuant to the 2019 supplementary budget handed down several months ago to a projected 2020 deficit of K4.6 billion certainly was eye catching.
With a deficit of the size of K4.6 billion projected, the two immediate questions that would come to mind were how the deficit was being financed and what strategies underlie the projected expenditure.