Government must review income tax

THERE has been an outcry to review the current tax system with respect to personal income tax in the last few months from various citizens throughout Papua New Guinea.
Regardless of whether an individual’s personal income is high, medium or low — the burden of tax is practically uniform since our personal incomes are taxed progressively (more you earn, more you pay) under the current tax system.
Sadly, the budget 2013 does not reflect the recent requests for amendments to the personal income tax but some excise and tariff rates have been amended.
Even though, this budget was generally people oriented, in my view, it failed to recognize the plea of the hard working citizen employees as a special segment of the general population. Because, according to statistics, the salary and wage earners contribute over 40% of the tax revenue in salaries and wages tax annually. Taxation revenue in total accounts for about 70% of the revenue composition of the National budgets.
Citizen employees make up less than 10% of the seven million people in PNG and have been continually supporting our country by paying salaries and wages tax and various other taxes to fund Governments recurring and development expenditures for the past 25 years. Considering the unbearable pinch of ever increasing cost of living in towns and cities. It is a huge burden for employees to foot the cost of living while being heavily taxed.
Therefore, tax rates should be reduced to achieve the following; firstly it will serve as a direct cash incentive which will stimulate individuals to venture into revenue generating activities. Secondly, the extra money from the reduced tax rates will provide buffer against constant rise in the price of common goods and services, and thirdly, this will be the Governments noblest recognition of the domestic responsibilities employees perform in looking after citizen dependants from rural villages to towns.
In light of the current economic outlook, the Government has projected a substantial revenue increase in billions of Kina by 2014 and beyond from multiple resource extraction projects, this projected increase in cash flow should adequately compensate the tax revenue lost through reduction of tax rates.
Therefore, it is now, the opportune time for the Government to reciprocate the efforts and contributions of the citizen employees by considering their requests to lower the tax rates in the 2014 budget or sooner.

Kyaisa Pro
Port Moresby