Personal income major revenue source: Report


Revenue in 2017 and 2018 continued to be dominated by personal income tax, although the downturn in the workforce in recent years has constrained this source, a report from the Institute of National Affairs (INA) says.
“Goods and services tax (GST) has just overtaken company tax as the second major revenue source, with business profits widely constrained by lack of foreign exchange and other business constraints, including greater competition from unregulated and largely non-tax-paying operations,” it says. “There was a valuable, if at this stage modest, recovery of tax revenue from the resource sector, although still only a fraction of the taxes paid by this sector prior to 2011, when output and exports were far lower.
“Dividend revenue from the extractive industries has been rising firmly since 2017, albeit requiring major prior public investment and in some cases heavy borrowing.”
The report said accountability over the proceeds and its prompt transfer to the State – as opposed to operating parallel, quasi-public expenditure – was critical.
It was partly being facilitated by the Extractive Industries Transparency Initiative (EITI) process, chaired by Treasurer Charles Abel, but including private and civil society participation including INA and Consultative Implementation and Monitoring Council (CIMC).
The report also said formal sector employment only provided work for about one-sixth of the employable population, outside education, the balance needing to gain their livelihood in the informal economy.
“According to the Bank of PNG’s long-term employment survey, non-mining employment has been in decline or at least steady since mid-2012, although the mining/gas-related employment is recorded as rising again since 2015, although only comprising a relatively small portion of the total workforce,” it said.
“Even with the major public sector investment in infrastructure and services in NCD, the capital’s employment rates have also been shown in decline since 2012.”