Income tax has not risen

The National Letters

A FEW days ago, a television station carried a news item on tax increase in the New Year.
That has now gone viral in the print and social media.
In fact, tax has not increased from the current tax regime but rather, slightly decreased, actually.
That is quite a relief and welcoming news for the New Year against the inferno of inflation.
The changes regarding tax misreported by the station are basically on the tax threshold.
Tax threshold is category or the level of income earned above which can be taxed.
For example, this year, according to Treasury, the tax-free threshold has increased from K10, 000 annually to K12,500 annually.
This simply means people earning up to K500 a fortnight are not subject to tax of any sort.
Below is a simplified version of the tax threshold for this year:

  • People earning K12,500 will pay zero tax (no tax regardless of their overall income);
  • People earning from K12,500 to K20,000 will pay 22 per cent tax;
  • People earning from K20,000 to K33,000 will pay 30 per cent tax;
  • People earning from K33,000 to K70, 000 will pay 35 per cent tax;
  • People earning above K70,000 is 40 per cent; and
  • Above K200, 000 is 42 per cent.

This indicates that tax payers are being taxed at the same rates relative to their respective incomes, as opposed to the misconception and speculation that all were being taxed at one flat rate.
Treasurer Charles Abel said that there had been actually some relief on the tax side – “we want to give some more relief but we just don’t have the space to give the relief that we wanted in a bigger way, but we are slowly getting there.”
However, the increase in the cost of goods continue unabated, particularly imported goods.
This can be attributed to the Government introducing tariffs to promote local industry create employment to grow the economy or the vicious inflation
Continuous misreporting will promote misconception and anti-government sentiments.
The TV station may not necessarily be adept in in-depth coverage and investigative reporting like CNN, BBC and other big time TV broadcasters but at least it must get its facts correct and be true to its fiduciary responsibility.

David Lepi
Port Moresby