Growing cities and towns in Papua New Guinea through Goods and Services Tax revenue

moneyThe fiscal capacity of the National Government is critical to ensure the provision of goods and delivery of services to the people. In this regard, the collection of tax is a critical component of government’s revenue generation that enables it to meet its operational and development expenditure priorities. In Papua New Guinea (PNG), the tax regime consists of direct and indirect taxes. The former includes income tax from salaries or personal emoluments and corporate tax, whilst the latter includes Goods and Services Tax (GST).

GST is a tax imposed on the sale of goods and services in the country or goods imported into the country at a rate of 10 percent of the value of goods and services sold or goods imported. GST collection is done by the Internal Revenue Commission (IRC) in each province as this is where economic activities occur. Currently, 60 percent of GST revenue collected from the provinces is remitted back to the provinces to support their provincial budgets in the delivery of goods and services for residents in the provinces (including cities and towns) as well as visitors from outside the province.