“The Internal Revenue Commission (IRC) has released some very revealing figures about tax collections in 2018. The Commissioner for Tax talks about collecting more than expected. However, after excluding a large and unexpected mining and petroleum tax bonanza of nearly K700 million, all other IRC collections are K500 million less than the government wanted in 2018. This is part of the fake revenue that I identified in my budget response. The government’s revenue strategy is failing because of its fake revenue forecasts. So the O’Neill/Abel government is resorting to other measures such as massive tax tariff increases on ordinary families of up to 25%” stated the Shadow Minister for Treasury and Finance, Ian Ling-Stuckey.

“I do not blame the loyal staff at IRC for not reaching the non-resource tax target of K7.7 billion in in 2018. The blame instead goes to the unrealistic targets demanded of the IRC by Treasurer Abel and Prime Minister O’Neill. Non-resource revenues were never going to grow very quickly given how sick the economy was in 2018 – the IMF’s latest estimate is 0% growth for 2018. It is time for a new coalition government that can set realistic revenue targets and get economic growth going again. Even more importantly, there is a need for a new coalition government that can spend taxpayer funds better rather than on their besties and cronies” stated Mr Ling-Stuckey.

Hon.Ian Ling-Stuckey,CMG.MP
Shadow Minister for Treasury & Finance

 12 January 2019

 

 Details

The IRC’s Commissioner of Tax, Dr Alois Daton, indicated that IRC slightly exceeded its revenue target in 2018. IRC collected K8 billion from PNG taxpayers, up from the planned K7.8 billion collections contained in the 2018 budget (see Budget Volume 2A p50 – photo below).

However, more than all of this was due to the unexpected boom in oil prices. The 2018 budget expected only K89.5 million in mining and petroleum tax income in 2018. According to the Commissioner of Tax, the IRC collected K774 million – nearly K700 million more. The resource tax bonus was simply to do with higher oil prices – it was unexpected and had nothing to do with the revenue strategy. Overall, the IRC collected K200 million more than expected. Resource taxes are K700 million higher. This means all other expected taxes are K500 million lower (K200 million minus K700 million).

The details of IRC’s collections from the 2018 budget are shown below. The total expected collections were K7.819 billion. Mining and petroleum taxes were expected of K0.0895 billion. This means that the IRC was expected to collect slightly over K7.7 billion in taxes other than “Mining and petroleum taxes” – so K7.819bn minus K0.0895bn is K7.7295 bn. The Commissioner of Tax indicates collections totalled K8 billion of which K774 million was in “Mining and Petroleum taxes”. This means (excluding rounding) that actual other tax collections totalled K7.226bn (so K8bn less K0.774bn). This means other tax collection were K503 million less than expected (K7.7295bn less K7.226bn).

The statement by the Commissioner for Tax was carried on PNG Loop on 12 January and is shown below. There are other details that are important – for example, it appears that Company Tax collections were expected to be K1.971 billion in 2018. The Commissioner has indicated that actual 2018 collections totalled only K1.7 billion – a major part of the revenue shortfall. The potential fall in personal income tax is of concern. Not enough information was provided to check on GST revenue collection figures (although some of these are collected by Customs).