“Treasurer Abel is correct that some media have not accurately portrayed the income tax cuts included in the 2019 Budget. However, he is not highlighting that he has given himself the maximum income tax cut of K710 per year. He’s even given it to me! Sorry. Apologies to the poor in PNG are due from the Treasurer. If you are someone on the minimum wage, he has not given you any income tax cut. If you are on double the minimum wage, you will get an income tax cut of K550. If you earn three times the minimum wage, you will get an income tax cut of K710. And if you are also a higher income earner, you will also receive this maximum income tax cut of K710. Claims by Treasurer Abel that these income tax cuts are directed to low and lower-middle income earners is just another half-truth from the PNC government” stated the Shadow Minister for Treasury and Finance, Ian Ling-Stuckey.
“We must remember that there were other tax measures in this budget. As mentioned in my earlier media releases, the government has increased tax tariffs by up to 25% on hundreds and hundreds of basic household foods and goods such as tinned fish, chicken, flour, milk and soap and detergents. They have also reduced excise taxes on luxury items such as binoculars and clothes dryers and Sony Playstations. In summary, the 2019 Budget did the following:
- For the poor, the PNC gives no income tax relief but takes higher tax tariffs;
- For middle income earners, the PNC gives some income tax relief but takes back even more in tax tariff increases;
- For high income earners, the PNC gives the maximum tax income relief and then gives them more through cutting excise taxes on luxuries.
“For the poor, the PNC taketh and taketh; for the rich, the PNC giveth and giveth” stated the Shadow Treasurer.
“This was a bad budget for low and middle income earners. It was a good budget for higher income earners. The PNC government does not understand the principles of fairness and equity. The people of PNG need a fairer, more honest, and more competent government”.
Shadow Minister for Treasury & Finance
8 January 2019
The minimum wage is K3.50 per hour. If someone works 42 hours a week for all 52 weeks a year, their annual wage income will be K7,644 per year (K3.5 times 42 times 52). This is the “minimum” wage income – so a low income worker. Such as person will get no income tax cut from the 2019 budget (reflecting that they do not pay any income tax). If someone earns double the minimum wage, or K15,288, they will get an income tax cut of K550 (or K10.58 per week). If someone earns more than 260% of the minimum wage, they will start receiving the maximum income tax cut of K710 per year. So someone earning twenty times the minimum wage will also receive the maximum income tax cut of K710 per year. Such as person is not a low-middle income earner, yet gets the maximum income tax cut. This is shown in the following graph.
The 2019 budget talked of “moderate tax relief for low to middle-income earners as shown in the following extract. However, the maximum level of tax cuts of K710 actually are only available to those earning at least 2.6 times the minimum wage, and are available to everyone earning more that K20,000 such as Treasurer Abel. So the column in the table below from page 82 of the 2019 budget should also show the K710 applying to all higher income levels. This is another dangerous half-truth from Treasurer Abel and the PNC government.
Note also another error in the above table. The new marginal tax rate from K12,501 to K20,000 is 22, not the 20 shown in the table. More clumsiness and lack of attention to detail from this government.
A detailed table showing the changes in tax levels from the 2019 budget for all income levels from K0 to K50,000 per year is below. The size of the tax cuts of K710 per year continue for those earning over K50,000 per year.