Super profits is beneficial

ALLOW me space to comment on the increase in the tax rate that will be applied to super profits or simply the application of super profit tax in the 2020 budget.
I read and heard some arguments against the super profit tax in the media because “it doesn’t matter anyway, most of the super profits are paid to Papua New Guinean shareholders”.
I think this is too shallow as majority shareholdings in those corporate organisations, which earn super profits, are owned by a minority group of local individuals and investment vehicles. Over the years, the earning of super profits hasn’t reflected fair and equitable distribution of economic productivity and has effectively bolstered a lop-sided economic growth due to economic resources being diverted and channelled away from weaker industries and the medium class to more productive industries like banking and mining and the rich.
Super profits are a recipe for income inequality which drives poverty, capital flight and economic slack which also causes budget difficulties and drives an economy into being a fragile state.
I think we should not have any hope to see super profits drive a shared economic prosperity in Papua New Guinea.
Remember, super profits are generated at the expense of the natural resource capital stocks, the environment and the people of Papua New Guinea.
But that profit has been going only to a minority of rich shareholders and this has been causing a lop-sided growth.
Look at the spill-over effects of the Panguna Mine in Bougainville and the referendum as well as the silting of Fly River in the Western.
The struggles of the average middle income earners throughout the country are some of the facts that economic prosperity has not been fairly and equitable distributed.
The World Bank and International Monetary Fund are aware of and understand the negative effects of super profits on third-world economies around the world so they are behind many progressive economic reforms to close economic loopholes and bolster shared economic prosperity in those economies.
This calls for the government to implement progressive tax reforms and the super profit tax in the 2020 budget is in-line with these reforms that will drive a shared economic prosperity in Papua New Guinea.
To cap it off, the implementation of the super profit tax will not make the shareholders worse-off because net profits would already be above breakeven and also all referent groups will continue to benefit from the productivity gains of the corporate entities and the industry which are earning super profits.

Mikes Haro
Pro- 2020 Budget