Levy will impact banking business: BSP

People entering the BSP Waigani Banking Centre in Port Moresby.

ANY banking levy introduced by way of changes to the Income Tax Act as part of the 2022 budget will negatively impact the banking business, an official says.
BSP Financial Group Limited (BSP) chief executive officer Robin Fleming was responding yesterday to the proposed Dominant Player Levy that the Government is expected to announce in the 2022 budget to be tabled in Parliament today.
“This suggested BSP tax unfairly targets the only PNG-owned bank in PNG and the region,” he said.
He said any such tax would be “regressive” as it would not promote competition or innovation.
“The tax would be applicable to any bank that has more than 50.1 per cent market share and will be taxed a flat amount of K190million, irrespective of how much profit after tax that bank generates.
“By definition therefore, the levy can only apply to one bank – BSP.”
He said three Australian-owned banks in the country would avoid having to pay any additional tax, while a PNG-owned bank “will continue to bear a disproportionate share of company tax payments in PNG”.
“(As) BSP has around 65 per cent market share of assets in PNG, (we) would have to stop the growth in assets which would mean no lending and no investments in Government securities, in order for the tax to no longer be applicable.
“This would have implications on the availability of credit in PNG.”
He said BSP continued to bear a disproportionate responsibility of providing banking services to the people.
“BSP is the only bank in Papua New Guinea that has branches in every province and the only bank that maintains and operates a network of sub branches for customers in rural areas of PNG,” he said.
“A dominant industry player levy of K190m will reduce the amount of dividends we pay to our shareholders by a similar amount.
“Our shareholders include KCH, Motor Vehicle Insurance Ltd, Petroleum Resources Kutubu, Credit Corporation, TISA plus Nasfund, Nambawan Super and Comrade Trustees.”
He said BSP was not looking for special treatment but only equal treatment from the Government.

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