Tax regime high

 By SHIRLEY MAULUDU

THE Tax Review Committee says corporate and personal income taxes in the country are highly taxed as a result of Papua New Guinea not having a capital gains tax.

Chairman Sir Nagora Bogan (pictured) said once the capital gains tax was introduced, it would relieve pressure on corporate and individual income tax.

He pointed out that these were the ones that carried the big weight of tax under PNG’s current regime.

“That (capital gains tax) tax we don’t have at the moment but many countries already have, including developing countries,” Sir Nagora said yesterday. 

 “The two that the country relies very on much is the corporate and personal income tax.

“In the current environment if we do reduce taxes in both corporate and personal, then we’ll leave a big hole. If you bring capital gains tax in, that’s going to sort of give you room to look at possible cuts in the other areas.”

The committee released its fourth in a series of issues papers titled Taxing Capital Gains last Friday.

A capital gain is the difference between current and future selling prices of assets, shares in mining and petroleum tenements or intangible assets among other gains

The paper aimed to seek stakeholders’ views on whether PNG should consider introducing such a system as part of a broader tax reform effort.

It outlined many reasons why other jurisdictions had chosen to implement a system for taxing capital gains which included broadening the tax base and providing additional revenue. 

These can provide a means to fund reductions in other taxes such as personal and corporate income taxes.

Like with other ‘issues papers’ released by the committee, the paper is intended to promote discussions. 

The committee will consider any submission and develop draft recommendations which will be subject to a further round of consultation.