Increased Tax for High Income Housing

The Secretary for Treasury, Dairi Vele, has called on media outlets to refer to fact over sensation in commentary on amendments to the taxable component of the housing benefits.
Secretary Vele said the facts are clear in the budget documents, that the only people affected by changes are those with more than K3,000 per week in accommodation cost.
“The amendment will not affect low-to-medium income accommodation rates,” Secretary Vele said.




HUNDREDS of working-class Papua New Guineans living in company-provided housing could lose more than half of their fortnightly salary if the Government’s new housing-benefits tax comes into effect next year.

This is because the rent value of the employer-supplied accommodation will be included with the actual salary component of the worker.

So, if a worker earns K600 a fortnight and lives in accommodation valued at K700 a week in larger cities like Port Moresby, Lae or Goroka, for example, the worker will be taxed on the sum K2000 (total benefits of K600+K1400) – even though he or she does not actually receive the extra K700 in cash every week.

Based on the prescribed calculations used by the Internal Revenue Commission (IRC) a worker earning K600 a fortnight before tax with three dependents and living in a high cost house or unit in Port Moresby will be required to pay K453.46 as personal income tax. This means their take-home pay being drastically reduced to about K147.

This is from the analysis by PNG NRI’s economic policy program leader and senior research fellow, Dr Francis Odhuno in his presentation “Some Tax Issues in the 2017 PNG Government” to the 2016 Leadership PNG Dialogue Series held at Lamana Hotel last week.

Dr Odhuno argued that the consequences of the proposed increase in taxable component of employer-provided housing benefit would greatly reduce people’s capacity to save and invest.

“With no or meagre savings, very few working class people will be able to start small and medium enterprises or buy their own homes. It will also push workers into low-cost housing or into settlements,” he added.

According to the Budget documents the proposed adjustments will come in effect in January 2017 with painful adjustment expected for a number of working class people especially in the major cities|


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s