With the high living standard in Papua New Guinea, the Social Democratic Party (SDP) is focused on reducing personal income tax for ordinary working class citizens.
Included in its party policies, the SDP plans to reduce personal taxes and progressively increase the minimum tax thresholds over a period of time.
Party leader and candidate for NCD Governor seat, Powes Parkop, said they will encourage personal savings and individual spending on goods and services.
The policy outlines that the spending will lead to acceleration in economic growth, reducing the need for Government deficit.
When people save, it will lead to capital formation and investment, reducing the need for the Government to borrow.
Parkop explained that the loss of revenue out of reduced personal income tax will be offset by the review of tax on profit on non-renewable energy sector.
“The volume of currency is greater when it is spent by the earner than the currency that is channeled through tax,” said Parkop.
“The tax rate is too high. We need to reduce it and paying taxes to the Government is not a good strategy, for every Kina the Government collects, we deliver less than 40 toea for projects.
“Money earned by the people must be used by the people to pay for goods and services.
“If we allow people who earned it to spend, they’ll spend with larger multiplier effects and that grows the economy,” Parkop explained.
He further stated that alternately, if people save, then again it leads to capital formation and investment and that also grows the country’s economy.
Parkop added that of course the Government needs money but not the type of high taxes from income earning citizens.