THE government expects to generate more than K9,328.1 million next year through revenues and grants, which is K1,083.6 million higher than the revised estimate for 2010.
Treasurer and Finance Minister Peter O’Neill told parliament yesterday when handing down the 2010 supplementary budget and the 2011 National Budget that the increase was attributable mainly to higher tax revenues, which reflected higher economic growth including the ramp up in PNG LNG project construction activity.
He said that the project grants were also expected to be higher, largely due to the depreciation of the kina against the Australian dollar and increased donor funding from AusAID.
The treasurer said the total tax revenue is projected to be K7,331 million in 2011, an increase of K850 million from the 2010 estimates and reflected increase in taxes on income and profits, supported by higher domestic taxes on goods and services and taxes on international trade.
He added that the increase was consistent with strong economic growth where it was anticipated collections in the majority of the tax categories were expected to be higher than the 2010 levels.
O’Neill said the total non-tax revenue was expected to be K1.5 million higher than in 2010, driven by an increase in Ok Tedi Mining Ltd dividends partially offset by low non-mineral dividends.
He added that the project grants for 2011 were to be K1,526.1 million, K232.2 million higher than the estimated level for 2010 and that largely reflected the depreciation of the kina against the Australian dollar.
Meanwhile, the 2011 budget included some significant taxation policy measures.
These include increases commencing a further gradual tariff reduction program, updating housing tax concession threshold and values and increasing the stamp duty exemption for home buyers to better reflect current market conditions, seeking to minimise the abuse of certain alcohol projects with a 10 % increase in tax, recognising environmental protection and clean-up costs as a specific tax deduction, enhancing compliance on directors of private companies for non-remittance of salary and wages and increasing the maximum allowable balance for Retirement Savings Accounts.
O’Neill said the new tax policy measures are designed specifically to improve law and order and social outcomes by reducing alcohol-related problems, assist first-time homeowners to buy their first home, encourage and support environment protection measures by business and to improve tax compliance.