Mining taxes drop by 53%
By HAIVETA KIVIA
TAXES collected from the mining and petroleum sector in Papua New Guinea dropped a whopping 53 per cent and it will fall further because of the dropping gold price on the World Markets.
This will also have an effect on the National Budget which this year is a Deficit Budget estimated at K2-3 billion but will likely balloon to K7 billion or K8 billion by the end of the year.
IRC collected K5.853 billion in direct taxes last year compared to K6.1 billion in 2011 which is a drop of five percent.
Treasurer Don Polye presented the IRC Annual Reports of 2010, 2011 and 2012 in Parliament on Wednesday stating the lateness of the reports were due to the National General Election, last year and the political impasse in 2011.
The overall tax collection, stated by Treasure Don Polye, according to the Internal Revenue Commission’s Annual Reports from 2010, 2011 and 2012, was on the rise.
But actual tax earnings in PNG actually dropped by five percent from 2011 to 2012 but was saved by the increased Goods and Services Tax (GST) which rose from K560 million in 2011 to K1 billion last year.
The biggest drop in tax collection was experienced in the Mining and Petroleum tax which dropped by a massive 53 percent and is set to drop further for this year’s collection.
The industry paid K2,073,533 billion in taxes in 2011 but that fell to K981,087 million last year and it will plummet further this year because of the dropping Gold price on the World Markets.
Dividend Withholding Tax also took a big dive, dropping by 39 per cent from K290,708 million down to K176,495 million.
The fall has been contributing to what the IRC terms as sale of shares of a large resource project from a private company to the State.
IRC did not mention the name of the mining company.
That company’s Dividend Withholding Tax is now directly paid to the State as dividend.
Individual Income Tax continues to be higher earner for the IRC with K2,645,116 billion because of the increased formal direct employment with the construction phase of the LNG project.
But high level of tax will only be sustained through the construction phase and will drop as the construction phase is now winding down in the project and jobs will be lost. Corporate Income Tax rose by 27 per cent from K1,373,092 in 2011 to K1,740,503 last year and Interest Withholding Tax jumped from K40 million to K67 million.
Most direct taxes rose but they were pegged back by falling taxes in the mining and petroleum sector and it will have a drastic effect on our 2014 National Budget. |
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