Illegal Tobacco Costs PNG Gov $40 M In Lost Taxes In 2014

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Tobacco Company Estimates Part Of Enforcement Pitch

By Frankiy Kapin

PORT MORESBY, Papua New Guinea (PNG Post-Courier, July 29, 2014) – The British American Tobacco in Papua New Guinea (BATPNG) says illicit tobacco trade in Papua New Guinea will cost the PNG Government almost K100 million [$US39,978,000] in 2014.

It said last year the total revenue loss was K96.1 million[$US38,418,000].

The tobacco company in a forum presentation stated that the recent rise in illegal tobacco has had a significant impact on the legal tobacco market and reducing the illegal tobacco will help the PNG Government get appropriate flow from the current tax regime.

The company said the current situation depicts illegal tobacco products are significant in PNG and illicit tobacco trade contributes to a sizable illicit trade in PNG, which will be ascertained in a report to be presented by KPMG Chartered Accountants in May next year.

Participants at the forum were told that a workshop last November bringing together Customs, ICCC, Treasury, Trade, Police, Defence and Health officers agreed to set up the PNG Anti Illicit Trade Taskforce (PNGAITT) to combat illegal tobacco.

It was made known that at present the existing memorandum of understanding (MoU) with Customs will be revised to cater for the PNGAITT arrangements.

The cigarette manufacturer said the establishment of the PNG AITT through Cabinet will measure illegal tobacco and initiate enforcement activities to combat the illegal trade.

Added recommendations include more investments into resources to assist Customs in combating the import of illegal tobacco in PNG.

BAT believes the approach will reduce illegal tobacco and will have a direct positive impact on tax revenue to government.

According to an economic analysis by accounting firm Ernst & Young, in 2012 BAT provided K1.6 billion[$US639,642,000] , which is 4 percent of the country’s GDP in economic contribution and an employment contribution of 946 employees. BAT said the investments will improve compliance and allow revenue agencies to be effective to collect more taxes for the state and with improved compliance the country’s massive debts in tax liabilities can be reduced.

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