No tax change on cigarette, alcohol and luxury goods

The Government has maintained excise tariff on alcohol, tobacco and luxury goods.

Treasurer Charles Abel announced this in Parliament today when tabling the 2019 Money Plan.

The indexation excise rate on alcohol has been suspended for 18 months meaning that excise rates will be maintained at the 1st June 2018 levels and after 18 months, the excise rates will be reduced to a 2.5 percent increase every six (6) months.

For tobacco, the indexation excise rate will be suspended commencing 1st December 2018, and thereafter, reduced to 2.5 percent increase every six (6) months.

A second excise tier for tobacco has been established for local manufacturers of which there will be no indexation for one year.

Tier two is only applicable to local manufacturers and the total allowable volume is capped to 50 percent of their tier one volumes in the prior year.

The local manufacturers have raised concerns on the falling demand for PNG made alcohol and tobacco products due to high prices caused by excise increases and stiff competition from imported substitutes that also involves cheap illicit products.

The Government through this measure intends to protect its revenue base by combating illicit trade and unregulated products and supporting local manufacturing.

Meantime, the Government will also be introducing an export tax of K15 per kg on sea cucumber exports to capture the resource rent on this endangered marine resource, assist National Fisheries Authority’s efforts to curb overharvesting and ensure sustainable sea cucumber fishing.

Freddy Mou