Govt called to look at tax reforms


The Government has been asked to look at tax reforms, particularly on corporate tax rates.
Port Moresby Chamber of Commerce and Industry President Rio Fiocco said made the call at a panel discussion during the presentation of the World Bank PNG Economic Update 2019 in Port Moresby last week.
“The US have dropped their corporate tax rate to 19 per cent,” he said.
“The average among the Apec economies is around about 22 per cent to 24 per cent.
“PNG and Philippines are sitting at 30 per cent.”
Fiocco said that was the main factor that any investors considered.
He said in the non-resource sector, particularly agriculture, he was encouraged by Fiji, which had passed a new amendment to their tax law to encourage investments in agriculture.
“The new amendment in Fiji depends on how much you invest,” Fiocco said.
“If it is a large-scale investment, you can get something like 0 per cent tax for up to 10 years.
“I do not think we have very much tax initiatives in agriculture here.
“If someone is looking to invest in a cattle farm, they will look at Fiji, Vanuatu, PNG and Solomon Islands and they will say, ‘Who has got the best deal on the table’?”
Treasury Secretary Dairi Vele said the Government’s focus on infrastructure development before agriculture investment was encouraging.
He said no matter how much investment was put in agriculture in the rural sector, people would still move into the bigger towns and cities.
“It leads to urbanisation,” Vele said.
“It happens all the time.
“You would think that if we have to give money for agriculture in the Central province, the people would not come to Port Moresby.
“Or that if you did it in Okapa,that they would not go to Goroka.
“Or Usino Bundi, they would not go to Madang.”
Vele said in the early 2000s, the Government had a National Agriculture Development Programme (NADP) to encourage the growth of the sector, however, it did not work.
“We put out a National Agriculture Development Programme, about K300 million,” he said.
“All went to ‘paper farmers’.
“Paper farmers means that people were writing submissions on pieces of paper, bringing in them to Treasury, Planning, Finance departments and taking vast amounts of money out of the Government, supposedly for agricultural purposes, but there was not one agriculture development from the national agriculture development programme.”
Vele said the Government is not like banks where securities were taken.
“Government grants money on a promise that you will give back, but what happens if you do not give back?” he said. “Nothing happens.”
Vele said that was why public-private partnership (PPP) was the way forward for development in PNG.