Papua New Guinea sought Bigger share of profit from companies

 THE Papua New Guinea Government is holding consultations with companies affected by the “market concentration levy”,  the country's Treasurer Ian Ling-Stuckey says.

“The levy was introduced as a revenue-raising measure in Budget 2022. The discussions have been with the three major companies likely affected by the proposed new tax – BSP, Digicel and Telstra,” he added.

Papua New Guinea sought Bigger share of profit  from companies [Photo : Central Bank of PNG, by pngfacts.com]

“We have had multiple meetings.

“Those included in the meetings are the Communications Minister and his secretary, and the Bank of PNG (Papua New Guinea) governor.

“Key regulators have also been consulted, including the Independent Consumer and Competition Commission (ICCC), and the chief executive officer and charman of the National Information and Communications Technology Authority (NICTA). Further consultations are continuing over the weekend,” Ling-Stuckey said.

He said the view remained that PNG had some sectors that earned high profit levels compared with other nations.

“Our banking sector is one of the most profitable in the world, with the huge gap between almost nothing being paid for savings and very high interest rates for loans.

“This benefit shareholders, including the minority of Papua New Guineans who are lucky enough to be in the formal workforce and paying superannuation.

“However, these profits are earned from the very high interest gaps between savings and investments that many, many more people in PNG are paying. We are simply looking for a fairer share for Papua New Guineans, and only asking for a small part of the total level of super profits.

“We have also seen extremely high levels of profitability in the telecommunications sector. During our discussions, it has been confirmed that Digicel earned a very high rate of return on its investments in PNG.

“Most of these returns are through the very high capital gain they stand to make when they sell their assets to Telstra for US$1.6 billion (more than K5 billion). Even after allowing for the operations of other countries in the Pacific, the Government is asking Digicel the important question of ‘How much of these very high gains should be shared with the people of PNG?’”

“There have also been very good consultations with Telstra. These have highlighted an expected increase in taxes of K41 million each year as the former royalty payment tax deductions by Digicel to itself will no longer be made.

“In addition, there has been a commitment to increase investment in towers nationwide.

“Combined, these are worth more than the earlier proposed levy. We were always interested in a fairer sharing of the profits in the telecommunications sector.

“The options from the consultations would be brought to the National Executive Council.

“This may include a change in the name to indicate the focus is an additional tax on highly profitable companies that dominate the highly profitable banking and telecommunications sectors.

“Parliament will then be asked to consider amendments, probably on Thursday of this week. We know that some may not like the outcomes, but this is a Government acting in the interests of all the people of PNG in this critical work of budget repair.”

Source : The National / Pacific Business News

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