Tax hit’s forestry revenue

By DALE LUMA
THE Forestry Industry Association has described the increase in round log export tax introduced last year as a failed policy.
Association president Bob Tate told The National that the current tax regime (50.2 per cent) had impacted businesses and resulted in a revenue decline of US$83 million (K288.42mil) for the months of January to November last year.
Tate said royalty payments to landowners for last year had also been impacted with a K16 million decline due to a decrease in production of 20 per cent by companies due to the high tax.
He said an estimated 8,000 local and 600 foreign workers lost their jobs as a result of mills and processing sites either shutting down or scaling back operations.
Wages lost by locals is estimated to be around K4 million.
Government revenue collected from the industry last year increased to K383,465,238 million from K379,011,840 million in 2019, according to Tate. He said the industry would continue to decline this year.
“It’s going to get worse, not better,” Tate said.
“A lot of companies including these processing factories are all shut, all finished and they are not going to reopen.
“It started last year and will continue this year.
“The impact of the tax is slowing shutting things down.”
Tate said in terms of the impact of the Covid-19, the demands for the country’s processed products had gone down and would only improve once the world economy improved.
PNG Forestry Authority managing director Tunou Sabuin told The National that the Government could ensure the survival of the forestry industry if it reverted round log export tax currently at 50.2 per cent back to 28.5 per cent.
He said the industry was not looking good for the year given the high log export tax regime and uncertainty in the investment climate with policy changes. “There is nothing much that the Government of PNG can do about the pandemic as it relates to trade in timber,” Sabuin said.
“But it can make a decision on the reduction of log export tax to support the forest industry survive.”
The industry contributes on average K334.3 million per year in taxes, according to the authority.
Total tax paid from 2015 to last November stood at around K2 billion.