Tax On Retirement Fund Remains A Challenge
The eight percent tax on employers’ contribution to super funds remains a major sore point in the formal sector.
Bank of Papua New Guinea Governor Loi Bakani admitted the levy remained a challenge.
Mr Bakani said this while discussing how super funds can assist micro banks to drive the process of financial inclusion in the rural areas which a delegate from the summit asked if the tax component from an employer’s contribution of eight percent be pumped into micro finance to generate capital.
As it is, this may not be possible but Mr Bakani said this spurred a need for the central bank as regulator with other stakeholders to dialogue with government for a review and if possible omit the tax.
“The government has been taxing the eight percent which is something that we didn’t want to happen but as we do regulating and overtime we might get the government not to tax the eight percent,” he said.
He said the establishment of super funds was to help workers have access to funds while working and contributing.
“This is an issue of how do you help the members create wealth for themselves while working and getting money out of the super funds.
“How we can help the contributors while working can create wealth for themselves to improve the livelihood and super funds are very much having the direction to help in that part of the inclusion sector,” he said.
Asian Development Bank (ADB) senior financial sector expert Dr Peter Dirou also confirmed that taxation on retirement funds is one of the issues that is faced everywhere including Australia.
“We want the government to keep their hands off our super funds that is our money,” he said.