PNG Government Rejects Tax Review Committee Recommendation To Raise GST

O'Neill: Tax hike from 10% to 15% would harm 'already-overburdened people'

By Malum Nalu

PORT MORESBY, Papua New Guinea (The National, May 26, 2017) – The Government is shelving a recommendation by the Taxation Review Committee to increase the Goods and Service Tax by 5 per cent because it will adversely impact low-income earners.

It will instead target companies which have been registered with the Investment Promotion Authority but have not been paying taxes.

The 5 per cent increase in GST – from 10 to 15 per cent – was one of the recommendations made by the committee headed by Sir Nagora Bogan after it held consultation meetings around the country from 2012 to 2015.

Prime Minister Peter O’Neill told a FM100 radio talkback show yesterday that he did not agree with imposing extra taxes on the “already-overburdened people” of this country.

He said he was disappointed with the review committee’s report.

“Quite frankly, I was disappointed with the report,” he said.

“The most obvious recommendation they made was that we must increase the GST from 10 per cent to 15 per cent.

“They did not recommend many of the reforms that we were looking for. That is why I told the officials to go back to the drawing board so that we can have a comprehensive relief for our wage-earners.

“I do not want to increase the GST because no matter what they say, it affects the ordinary men and women more than those who have got enough income.

“When you go to the shop, it doesn’t matter whether you earn enough money. Everybody (rich and poor) pays the same price. That is why it affects the poor, and those who are not able to afford, more than anybody else.”

Sir Nagora, when contacted yesterday, said he would later respond to O’Neill’s statement.

The prime minister said the Government needed to look at other reforms.

“The other reforms include those who are now avoiding paying tax,” he said.

“We are committed to reducing personal tax rates and company tax rates. But we are at the same time, to make up for that revenue downfall, going to expand the base of the tax rate.

“There are lots of people out there who we know have businesses.

“We’ve got thousands of businesses registered under IPA (Investment Promotion Authority), but are not regular taxpayers.

“We will now be telling our people at IPA, our tax people and the people at the banks that we must now tax those people. Once you register a company, you must have a tax file number.

“If you want to open a bank account, you must have a tax file number so that we capture those people who are not paying their share of taxes that we all are paying.” O’Neill said workers were already heavily taxed and it was not fair that certain companies were not paying taxes.

“This is a criminal act so they must be charged.”

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