Photo: Greg Pawson. Credit: Kina Bank Facebook Page
Kina Bank's CEO and Managing Director, Greg Pawson, has called for more competition in the banking sector in Papua New Guinea. According to Pawson, the recent 50% increase in corporate income tax to 45% will make it difficult for other banks to compete. He also stated that the decision to increase the tax was made without considering the true consequences of how it would impact the ability of a strong challenge brand to continue its growth agenda.
In a statement made while announcing Kina Bank's 2022 financial year results, Pawson expressed disappointment in the tax increase and described it as a hindrance to the remainder of the bank's 2025 strategic plan. He said:
“The announcement by the government in the December budget for a 50 per cent increase in Corporate Tax for Commercial Banks to 45 per cent is disappointing and a hindrance in the remainder of the 2025 strategic plan. Not only is this quite possibly one of the highest tax rates in the world, it targets a sector of the market that is critical for supporting PNG’s economic growth aspirations."
Pawson stressed that more banking competition was needed in the country, but the additional tax would make the one major bank stronger and weaken competition due to a lack of size and limited investment to expand and grow. He said:
“More banking competition is required in PNG, however, this additional tax impost will simply make the one major bank stronger and weaken competition due to a comparatively lack of size and therefore limited investment to expand and grow.”
Pawson further commented that many organizations in the country need to pay taxes, but they are not doing so. He urged the Internal Revenue Commission (IRC) to improve its underlying efficiency to ensure that those businesses pay taxes and bring more business from the informal sector into the formal sector. Currently, Kina Bank pays K32 million in taxes. He said:
“The IRC (Internal Revenue Commission) has the mandate to improve their underlying efficiency to ensure that those businesses are paying tax and bringing more business from the informal sector into the formal sector.”