Personal Taxes

Recommendation on earnings tax

The commission met with residents of Lae on Friday 8 October to seek their views on whether to change the tax rate, tax incentives for public services, how the informal sector can contribute to taxation, and whether pension benefits should be provided VAT should be tax-free

CLRC Secretary Dr. Mange Matui said of their consultations in Madang and Lae that they had taken note of civil servants’ frustration over tax rates.

“In general, if you look at the taxes we pay, you will find that a certain civil servant who earns a fortnightly salary of 1,000K spends more than half of that particular money on taxes,” he said.

“And that is the experience that we have. It’s the same story we hear; that our officials pay more than half of their salary into income tax. “

Dr. Matui indicated that another concern raised was retirement and retirement planning.

“What the participants found is that the employer’s share and the interest on these savings are taxed. Through this particular education, people are now aware.

“In general, a lot of them said it was fair.”

The CLRC secretary stressed that during her consultations she had found a lack of awareness on tax issues.

Dr. Matui said the responsibility rests with the Treasury Department, PNG Customs and the Internal Revenue Commission to raise awareness among our citizens.

“The other important thing that we also found out was that our laws provide for tax incentives, such as tax rebates and wage waivers. Those are tax incentives, but the blatant fact is that there is a lack of knowledge.

“There is something in the public service that government agencies, their human resources department and human resources officers need to do more.”

The review of income tax laws is underway following their official introduction late last month. The CLRC team will be in Manus on October 12th and in the Northern Province on October 13th. On October 27th, they will hold their final counseling at the NCD.

Once its reports have been compiled, the Commission will work closely with the IRC to make recommendations to the government and work on the necessary proposed changes to income tax.

(IRC staff answer questions at the forum of the Constitutional and Legal Reform Commission in Lae)

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