Fleming calls for careful consideration on profit tax

SERIOUS analysis should be given on how an additional profits tax on banks is calculated, says Bank South Pacific chief executive Robin Fleming.
Fleming made the statement in response to the Government’s announcement to review bank licensing fees and additional profit tax on banks during presentation of the 2020 National Budget last week.
“Unlike excise duties or import duties, increases in company taxes cannot be passed on to the consumer and are a tax on the shareholders, not the business,” he said.
“Failure to apply such a tax at a common rate across the industry would not only be inequitable but also disincentivise the more profitable banks from continuing to become more efficient and productive.
“It would be incongruous if the bank that attracts an additional profit tax is the only predominantly owned PNG bank and that their PNG shareholders would be disadvantaged by such a tax.
“There are a number of issues that need to be considered when contemplating additional taxes to industry sectors that are more profitable than others.”
Treasurer Ian Ling-Stuckey has said that he would look to engage more with business now that the budget has been handed down.
“BSP looks forward to discussions on these matters,” Fleming said.
He said it was timely for the government’s plans on reviewing bank licensing fees.
“In regard to the license fee, this has not been reviewed for some time and it is timely to reassess the basis for determination of the fee recognising that the Bank of PNG undertakes much more supervisory oversight of banks then it did years ago,” Fleming said.