PAPUA New Guinea has become a paradise for illegal businesses to operate in without paying taxes, the Tax Review Committee says.
Committee member Sir John Luke Crittin described it as a “huge black economy” in which businesses were not registered, thus bypassing the tax system.
“They manage to make an enormous amount of profit and not pay K1 of taxes,” he said yesterday.
“We’re losing billions every year.
“It’s not what hasn’t been collected, it’s what has escaped.
“It’s the businesses that are not registered – they don’t pay taxes. They’re not in our books and they bypass the system.
“The problem is that the small people who are trying to do the right thing are investigated. But the big people are not investigated and a lot of them escape because they have lawyers and money.”
He said the “black economy” also involved money laundering.
“You can get a briefcase filled with kina, you go to a certain place in Port Moresby or Lae, you give the money and you get a receipt,” he said.
“You go to Singapore or Hong Kong and get it in dollars. No declaration. That’s it.
“That money never comes into the tax system.”
Sir John said the system in PNG had improved but implementation was still a problem.
He told reporters that criminals had become very smart and made fun of PNG because it was so easy to by-pass its tax system.
He said the committee would “plug the holes”.
Sir John said the taxation system in the country was unfair as it slammed the small people.
He reassured the public that the committee was not there to raise the tax of the country but to find ways to decrease or eliminate taxes for
people earning K1,000 or less per fortnight.
He said the committee would make recommendations to the Government to identify those not paying taxes and generate extra revenue from them.
Chairman Sir Nagora Bogen agreed with Sir John and said it was definitely a challenge in terms of policy design and administration but the committee would do its best to address it. The National