ICCC warns against Carbon levies

The Independent Consumer and Competition Commission (ICCC) is concerned about the introduction of new carbon levies or additional excise duties by the Climate Change and Development Authority (CCDA).

In a recent media statement, the ICCC addressed its concerns, saying there was a lack of meaningful consultations with the affected industries on the matter, and the legal process used to introduce these new levies and its adverse impact on consumers and businesses in PNG.

ICCC Commissioner and Chief Executive Officer, Paulus Ain said, these carbon levies were initially gazetted by the Ministry of Finance in National Gazette No. G304 on 27th May, 2020 and then amended in National Gazette No. G673 on 12th October, 2020 and reflected as an increase in excise tariffs.

Commissioner Ain said following the gazettal of these new levies, the ICCC then made a decision not to include the additional excise duties in the pump prices for petrol, diesel and kerosene based on the view that any amendment to the Excise Tariff Act should be initiated by the Department of Treasury and passed through Parliament.

He further said the Department of Treasury advised in October 2020, that the carbon levies or additional excise should not be implemented until the impact on businesses and consumers are fully assessed.

“Despite the advice from Treasury, who are responsible for tax policy matters, the CCDA has proceeded to implement the carbon levies or additional excise tariffs, as per G673, on 12th April, 2020,” Mr Ain said.

“Despite the important role the ICCC undertakes in pricing of the refined petroleum products at the retail level, the ICCC found out about this latest development when it was brought to our attention by a concerned stakeholder.”

He said, “Treasury and ICCC were not copied on recent correspondences in relation to this matter when CCDA informed the industry of their intention to commence collecting these new levies or additional excise duties.”

The ICCC is now very concerned about the impact of these carbon levies and fees on the petroleum, airline and agriculture industries, and consumers at a time when the economy and businesses are already reeling from the global and national effects of COVID-19.

Ain said, “Based on the actual volume of fuel products used in the country in 2020, the ICCC has estimated that from 2021 onwards, consumers and businesses in PNG will incur an additional fuel cost of about K12 million annually.”

“This additional estimated cost to the economy will increase once the economy recovers and more fuel is consumed in the market, or when CCDA further increases the carbon levies in the future.”

Mr. Ain added that despite the CCDA and the Department of Finance’s intention to collect the new levies in April 2020, Puma Energy PNG Refining Limited began collecting these levies in November 2020, in accordance with National Gazette No. G673 of 2020.

“The CCDA needs to clarify what it is going to do about the levies Puma Energy has been collecting from consumers since November, 2020,” Ain said.

Under the Prices Regulation Act, the ICCC is required to include any legitimate costs of doing business in regulated prices.

Given the legal issues and Treasury’s advice to delay the implementation of the new levies until it is properly considered on a policy front, ICCC is calling on CCDA to delay the implementation of these new levies until Treasury provides its feedback on this matter and proper processes are followed to amend the Excise Tariff Act if necessary.

This is because the purpose of the excise duties currently applied on refined fuel products is to minimise pollution on the environment.

Therefore, any carbon levies or additional excise tax on refined fuel products should be considered holistically by Treasury to avoid duplicate fees and charges being imposed on businesses in the country.

Ain said the ICCC has made a decision to exclude these levies in the prices of refined petroleum products pending further advice from Treasury.

Press Release