Government out of pocket

THE state’s tax collecting ability must improve if it has an outstanding debt of K2.1 billion to claim from non-paying and defaulting taxpayers (individual and companies).
Stringent measures are obviously needed for the government to get what it is owed, however, a combination of bureaucratic inertia and a lack of policing of the country’s tax laws see the state out of pocket by a sum that is equivalent to 16% of the last annual budget.
That money could be used to help fund the government’s priority areas in health, education and infrastructure such as roads, bridges, ports, air strips and other state services.
It is money that the government needs but whose own inefficiency has caused the situation in the first place.
Action must be taken and done so at the soonest possible time for one would assume that to collect such a large sum, it would ironically cost taxpayers for the re­levant department, the Internal Revenue Commission, more in resources (administrative, manpower, logistics and legal) to put a leash on the runaway arrears.
What also needs to be looked at is the effectiveness of tax law policing and how people and companies adhere to taxation policies and rules.
It is encouraging to see Prime Minister Peter O’Neill’s government express its concerns on the seriousness of the issue and look to rein in those that are treating Papua New Gui­nea’s taxation statutes with contempt.
What is of concern is that this figure was revealed at a meeting between O’Neill and the IRC’s senior management team led by Commissioner-General Betty Palaso only last week. We shudder to think what the IRC has been doing over the previous years to let tax liabilities rise to such titanic proportions. 
We would hasten to add at this juncture that whatever the reasons are for failure to collect outstanding taxes, it cannot be something that happened overnight but was due to defaulting parties as well as the department’s limitations, internally and as a state body, to chase what we would assume are a varied base of taxpayer.
This was made evident when O’Neill was told frankly that the IRC “lacked the capacity to go after business houses, individuals, and organisations who owed taxes to the government”. 
O’Neill, on his part, knows about this dilemma or, at the very least, should have had some inkling as to the gravity of the situation being a former finance minister in the government of Grand Chief Sir Michael Somare in the mid-2000s.
“The IRC has done well, year in year out, in revenue collection despite capacity constraints and other issues confronting the organisation,” O’Neill said.
“But it is unacceptable that our outstanding tax liability has been allowed to accumulate to such a high level.
“Everyone must pay their share of tax if they want to continue to live and do business in our country.”
The question now is what can he do to get things back on an even keel?
One of his first acts to arrest this build-up of arrears has been to allocate more funding to beef up the commission for the task ahead.
Credit, though, must be given to Palaso and her team for collecting hundreds of millions of kina in taxes over the period of her tenure.
That is a feat that is
admirable given the existing size and capability of the IRC.
We must also acknow­ledge the huge part these taxes have played in propping up annual budgets, year in and year out.
Still there remains a mountain of work to be done and potential revenue cannot be allowed to slip through the cracks for they would surely be needed by the state to implement its plans for growth.
Every kina that is not collected has in one way or another potential to make the lives of Papua New Gui­neans better, giving a measure of surety and security for the future.