Discovering that death & taxes are the only certainties

JOE WASIA | Supported by the Bob Cleland Writing Fellowship

I BEGAN MY EDUCATION at age six in the remote Kwia primary school in the Wapenamanda district of Enga Province in 1993 and moved up the ladder until I found myself graduating from university early this year.

A few weeks after graduation, I was offered a job in one of the construction companies here in Papua New Guinea.

I went to the site the day after the interview. As the company policy dictated, I had to follow the same procedures of employment as everyone else: safety inductions, medical checks and contract signing were done in the first three days.

Then, on 29 May, I started my official duties. That’s where a new chapter was opened and I started to experience the outside world.

I really enjoy working with the company despite a few challenges. Official duty starts at 5.30am and ends at 5.30pm every day. I had restless days knowing that I would be rewarded. And I was able to put into practice what I learned during my years of schooling.

After two weeks, a French colleague who was also working with us in the department asked me if I had received my salary. The common term used in PNG is pay; I hadn’t heard of salary.

In the evening, the manager gave me a medium-sized yellow envelope. On the outside it said, ‘Joe Wasia’. And on top it read SALARY in bold print.

I sat comfortable on my desk and gently opened the envelope. It was my first time to open a parcel. I’d been paid cash before but never knew what a pay slip and its particulars looked like.

I took out the pay slip and started reading. The words ‘gross pay’ were written at the top and upon seeing the figure next to it my lungs flapped. I stopped and thanked myself for the hard work and sleepless nights at school.

Then I continued reading the details and, towards the end, there was the word ‘tax’ - a word I had only read about in text books and newspapers. Beside it was an amount which was almost half of the salary.

After few moments it came into my mind that this was the government’s share.

I had doubts, as the figure was almost half of my salary. I ran to my manager and put the pay slip on his table and asked him to explain everything in it.

He explained in detail from the top and when he went to the part where it stated ‘tax’ my heart stopped beating for few seconds.

“This is the amount of money your government deducts as tax from every individual worker and it is a compulsory deduction under your national laws” he said.

I looked seriously at him and he added that the company couldn’t do anything regarding tax.

With a low voice I thanked him and took the pay slip and walked back to my desk.

I had a couple of sleepless nights after that first pay. It seems harsh treatment by the government to collect huge amount of tax from individual workers, who are taxed again on the goods and services they buy.

There are many ways the government taxes its people, and it’s law. Income tax is paid directly to the government by every individual worker in the country. And indirect tax is paid through goods and services that citizens buy.

Every time we use a service provided by a company or a government or buy goods from the store we pay tax. Government taxes the packet of rice we buy from the store, and the transport services we use, the books that we buy, almost everything. And that’s really a painful bite by the government.

It must be painful is for the workers earning K300-400 a fortnight. It must be difficult for them to sustain their families in towns and cities for the next two weeks.

The cost of goods and services here in PNG has skyrocketed in recent years. To make the situation worse, every individual worker is required by law to pay tax.

Government should look at reducing income tax for every worker. It should also amend the laws governing goods and service tax so that people can enjoy their lives.

Only then, I believe, will people feel the effect of the economic boom that Somare and O’Neill preach about.

Comments

[Peter]

These tax rates serve only to drive people to rely on the "unoffical" economy.

You don't pay tax on purchases at Waigani market, or paying a man to do the gardening, or buying a few marvellous carvings from a street seller.

Seriously, the PNG government needs to rethink its whole tax regime. The vast majority of the population just dive under the radar.

[Peter Kranz]

In Papua New Guinea:

Income Tax rate - 42%

Corporate Tax rate - 30% (unless you get a tax-free holiday as an investment incentive. Check what tax RamuNico pays)

Sales Tax/GST rate - 10%

[Phil Fitzpatrick]

There are a couple of other things to consider here too.

Firstly, as far as I know, no one ever gets a tax refund in PNG. So if your boss asks you to provide something to help in your work tell him/her that it isn't your responsibility.

The second thing to consider is that many employers in PNG take tax out of their employees' wages but fail to deliver it to the government.

I've come across this practise in all sorts of places. Not least are the overseas companies which are supposed to pay witholding tax (around 12%) but fail to deliver.

There are tax tables published by the government. Get hold of a copy and check your rate Joe. You might be surprised.

[Mrs Barbara Short]

Over the past six years, since I've been in contact with my old Keravat NHS ex-students, who now help to run PNG, I've often been told by them of the bad things that have been happening.

They tell me about all the corruption in a fatalistic way, as though they had no power to do anything about it! They even joke about it! Sad joke!

That's why I have been pushing for the country to get an Independent Commission Against Corruption. I'm heartened to hear that O'Neill agrees with me.

You need to set up an organisation that you can speak to when you see corruption has taken place. You need to feel safe talking to these people. They need to be well-trained lawyers who know what their job involves.

Of couse, anyone with a bit of wisdom can do the detective work to expose the corruption.

Down in Australia it is often a reporter in one of the newspapers who does it. I think in a court case they are supposed to be allowed to keep secret their informants if their informants fear for their lives if they are exposed.

I've written before about having the courage to expose corruption with the threat of death hanging over you.

It is not an easy thing to do. But until people start to do it, the corruption will continue.

In Sydney, at the moment, the ICAC is hearing an inquiry into a lot of corruption that took place in NSW in the past few years that involved a number of men in parliament and their off-siders.

We hear daily of the way these men grew rich on coal leases etc on the advice from members of the NSW Parliament.

No doubt something like this has been occurring in PNG.

I read somewhere that some body in PNG is making Eremas Wartoto stand trial for alleged corruption. But there doesn't seem to be much mention of his mates in the government at that time.

If you are being forced to pay 50% of your pay in tax in your first year of work, that sounds very high compared to Australia.

I feel sorry for you but I am not in the situation of knowing enough about your government budget to make a worthwhile comment.

I'll leave that up to the PNG economists of today.

Maybe one of the professors of economics might like to write about this topic for PNG Attitude. They know who I mean! I hope they read this blog!

[Robin Lillicrapp]

I've thought that there should be a tax model to suit the PNG culture to provide a more equitable outcome for the country. Don't know what it might be: perhaps our readers might suggest one.

Phil, I think, on a kindred post referred to the need to reduce the divide between the haves and have-nots. The cost of not doing so would be to foster simmering resentment and strife. (as if it is not already present, eh?)

I once read that when a nation's personal tax rate exceeded 25% effective bankruptcy followed.

Obviously, PNG must be kept afloat by current and anticipated extractive industry windfalls or how else has she escaped ruin. Continued borrowings are already or will in future increase the debt load on PNG taxpayers whose ever increasing remittances act to shore up a failing economy.

Where is the burden of the mass of unemployed and hungry squatter settlers or disenfranchised rural dwellers being met if not from the meagre left-overs of the pay-packets of the employed.

Perhaps the new Governments efforts to secure security for the provinces will yield some discerning and decisive efforts to curb corruption, and foster renewed interest in cottage industry and agriculture thus building capacity in the rural and marginalised areas.

One might think that ensuring a degree of self sufficiency would be necessary to allow the catch-up effect of improved infrastructure, revitalised education and training sector to push its product into an emerging industrial workforce et al

[Paul Oates]

Message to Mathias. Mate, what's going to change the current situation? Less taxes or better management?

The only way to improve the current impasse is for taxpayers to take an interest and report illegal activities. If that were happening, how could the current situation still exist?

Bernard has nailed it well and truly. Unless the majority of people want change and are prepared to stand up and be counted, nothing will change.

Blaming others only vents hot air. It lets the guilty continue to get away with what they are doing. Who do you know who is honest and is prepared to lead?

No leadership equates to no action. Phil Fitzpatrick will tell you it only leads to an increased gap between the have's and the have nots.

[Mathias Kin]

Good stuff Joe. This is the crazy world of taxes we live in; don't mind if my tax provides needed medication for a sick person in Karimui.

But I can't digest the thought of that huge tax being pocketed by those elected politicians and their unelected bureaucrats and middlemen, usually in collaboration.

Message for the government, stop all the gimmicks. All that talk of fighting corruption will achieve nothing positive unless you clean out your own backyard and empty those bulging pockets of all that you have shoved in.

Only than can we believe your big talk.

Reducing tax is a positive way to ensure money stays in the hands of the family and people can prosper economically; not being abused by a few in the know.

[Bernard Yegiora]

Good advice from Barbara.

Hope in the future having a plan to reduce the rate of income tax or any tax will be a campaign platform for aspiring candidates in PNG.

We rarely vote for candidates who talk about such pressing issues and vote for candidates based on kinship ties and free hand outs.

[Paul Oates]

Hi Joe - there is an old adage that the only two certainties in life are 'death and taxes'.

While we have all railed at times over the amount of taxes we pay, the real contention should be about what actually happens to our tax monies and how they are managed. If we are getting value for our taxes it might be seen as worth the pain.

That my friend is however a totally different ball game. Try equating your tax rate (roughly 50% as you say), with the known and acknowledged fact that 50% of the PNG budget disappears each year through corruption.

How do you now feel about paying your taxes?

The only way there will ever be a change in how the government operates is for people like yourself to take an interest to find out in what is actually happening and the will to do something positive about it.

All to many then stall at that point and mentally decide: 'If you can't beat 'em, join 'em.'

Hence you are left with what you now have.

If it was easy, everyone would be doing it.

[Mrs Barbara Short]

Wonderful story, getting your first pay packet! I can remember the same thing happening to me back in 1961 when I started teaching at Auburn Girls' High School in Sydney.

But I don't think the income tax was at such a high rate as to bother me. My father had told me about income tax all my life so I guess I just took it as natural.

I had been to government schools for 13 years and received free education and then I had a Government scholarship to study at the University of Sydney to gain a B.A. Dip. Ed. so I had certainly been greatly helped by government finance.

I ended up teaching Economics, and other subjects, to many students in Australia and PNG, and I know I taught a lot about the government budget.

If you are feeling concerned about your rate of income tax I suggest you start to study Economics and get some information on how the PNG government runs its annual budget. You can't really comment until you know the full story!