PORT MORESBY – Papua New Guinean intellectuals and politicians have erupted on Facebook to fake news emanating from EMTV that there were income tax hikes in the government’s 2019 Budget.
As a sometime government critic, I found myself in the awkward position of almost defending and supporting Treasurer Charles Abel.
So I disseminated the infographic at right showing how much various sectors of the economy contribute to government coffers.
The truth is that workers have been the biggest taxpayers in PNG and big companies have been riding on their coat tails.
Companies call this ‘group tax’, which is mostly comprised of taxes on wages and salaries.
Corporate income tax on the other hand refers to tax paid by the company. In PNG a company is able to pay huge group tax (drawn from employees’ incomes) and almost zero corporate income tax.
So I was baffled when people who I thought were knowledgeable about such matters began to scream on Facebook about hiked income tax. It wasn’t a hike – it was what they’d been paying all along.
I had personal experience of this. In 2013, I did some consultancy work for a company and noticed that 42% of my pay was deducted in income tax.
Since that painful observation six years ago, I’ve pursued tax minimisation strategies with my employers. After all, it’s a painful experience giving half your pay to a corrupt government.
So for me, anyone complaining about 42% tax on Facebook as something new was ignorant of what they had been paying all along.
The Facebook uproar solicited responses from Treasurer Abel and the unions which emphasised how ill-informed people are of the facts.
There’s no doubt that Papua New Guinea needs an overhaul of how it collects taxes not just from the private sector but also its citizens. The good news is that Sir Nagora Bogan’s tax review committee has already provided recommendations for tax rationalisation.
The bad and baffling news is that a tax review paid for by the O’Neill government hasn’t had its recommendations implemented.
In the meantime, it’s wise to remain wary of what the PNG media tells you.