Salaries and Wages Tax May Be Reduced

By: PNG Business News April 16, 2021

The Internal Revenue Commission's (IRC) Commissioner General, Sam Koim, said that the IRC will advise the government on lowering the Salaries and Wages Tax (SWT) if they raise enough revenue through the successful collection, especially through the Goods and Services Tax (GST).

Koim said that they would make the recommendation until the National Government has adequate fiscal room.

This was mentioned by Koim at the start of the GST Act's Section 65A Merger with the Integrated Financial Management System.

He said that there is currently a large tax gap, particularly in GST collection, and that by concentrating on GST, they feel they can generate enough revenue for the government.

Unlike SWT, which is only charged by a limited portion of the population, GST, according to Koim, is paid by all.

“GST is a tax that is broad-based and everybody in this country participates in contributing one way or the other. And if we set up effective collection mechanisms and we collect all the GST areas that we collected, I believe we can create enough fiscal space, we can generate enough money,” said Koim.

He claimed that by effectively collecting GST, the government would be able to build fiscal space and consider tax reductions in other areas, such as SWT.

“We can offer suggestions to the Government that now we’ve taken ownership of the existing size of the pie, you can now explore reducing the salaries and wages taxes. At the moment we can’t offer that because, at this time, the Government is also facing financial stresses. And so it would be suicidal for us to offer that,” said Koim.

SWT continued to be the leading source of tax revenue.

The IRC wanted GST to be the highest-earning levy.


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