The Constitutional and Law Reform Commission (CLRC) was recently in Lae to gauge residents’ views on personal income tax.
The Commission met with Lae residents on Friday, the 8th of October, and got their views on whether the tax rate should be changed, public service tax incentives, how the informal sector can contribute to tax and whether superannuation and retirement benefits should be free of tax.
CLRC secretary, Dr Mange Matui, said from their Madang and Lae consultations, they have noted the frustrations from public servants in relation to tax rates.
“Generally, when you look at the taxes we’re paying, you’ll find that one particular public servant that is earning a fortnightly salary of K1,000, more than half of that particular money is going to taxes,” he said.
“And that is the experience that we are receiving. It is the same story that we are hearing; that our public servants are paying more than half of their salary into personal income tax.”
Dr Matui outlined that another concern raised was in line with superannuation savings and retirement benefits.
“What the participants have found out is that, what is being taxed is the employer’s component and the interest that is made on those savings. So through that particular education, people are now aware.
“Generally, many of them have said that it’s fair.”
The CLRC secretary highlighted that during their consultations, they have realised that there is a lack of awareness with regard to tax issues.
Dr Matui said the onus is on the Treasury Department, PNG Customs and the Internal Revenue Commission to conduct more awareness for our citizens.
“The other important thing also we’ve found out was that, in our laws there are tax incentives provided, for example, tax rebates and salary sacrifices. Those are tax incentives that are being provided but the glaring fact that comes out of it is that, there is total lack of knowledge.
“There is something within the public service, the state agencies, their human resource division and human resource officers must do more.”
The review of income tax laws is underway following its official launch late last month. The CLRC team will be in Manus on October 12th, and Northern Province on October 13th. They will host their final consultation in NCD on the 27th of October.
After gathering their reports, the Commission will work closely with IRC and make recommendations to the government, as well as work on the necessary proposed amendments to income tax.
(IRC staff answering questions at the Constitutional and Law Reform Commission forum in Lae)