Tax revenue telling lack of interest by private sector

Goroka MP Bire Kimisopa

By MATTHEW VARI

Sunday, November 13, 2016 (Sunday Chronicle, PNG)

MEMBER for Goroka and the Opposition, Bire Kimisopa has cautioned the government to take heed of signs within its tax revenue levels to see the need for real expenditure cuts.

He made the comments when debating on the passed 2017 national budget on Tuesday- zeroing in on the level of revenue in income, capital gains, international trade, tariffs duty , and payroll tax.

“If you lump all of that together, this is perhaps the barometer or thermometer of our economy, it has already tanked at about K8 billion to K9 billion,” he said.

“At 2013 it has plateaued (leveled out), there is no more money to be raised, it has plateaued around K9 billion, and the trend will be the same.”

“Once in a while we may get a spike in the tax revenue, if you take the grants in or a generous contribution from the SoEs (State owned Enterprises) in terms of dividends paid by them.”

He said the K9 billion ceiling was not increasing, and will not be increasing anytime soon unless drastic decisions are made.

“The revenue is not going up, so if there is any tangible proof that the economy is growing then we have to know. How many new jobs were created in this country?” The MP asked.

“The private sector has lost interest in the economy that is why they have not gone into the bill and bond market.”

“The treasury bill market issued by the Central Bank to pick up the treasury bonds, because the treasury bonds maturity is roughly about three years, but the treasury bills short term- 90 days and 364 days at any one time.”

He said the sector has been going in taking bits and pieces of what is theirs because of the lost confidence in the government.

“So they are withholding that money so the private sector is not growing so it has plateaued the revenue.”

“There are a number of things we ought to do, first and foremost we have to cut expenditure. We must cut expenditure and cut it real.”

“The problem with budget 2017 is that when we issue the 2016 supplementary budget we have not completed some of our pet projects in terms of DISP and PSIP.”

“If we are having a critical cash flow problem that will seep into 2017, that was the case in 2015 where some of the commitments were not paid, roughly K400 million, all of a sudden that crept back into 2016 with the first lot of revenue that came into Finance in January to March,” he said.

“Now we are going to have the same problem. Had we fixed the supplementary budget by capping off the DSIP and PSIP we wouldn’t have this problem.”