IRC Commissioner Sam Koim says the removal of dependents tax is not the cause of pay cut

Friday, 12 January 2024, 4:07 pm

[Image credit: Getty Images]

The tax office has clarified that the removal of the dependents tax rebates is not the cause of increased tax on the first pay for public servants this year.

Internal Revenue Commission [IRC] Commissioner General, Sam Koim said “​we also confirmed that the dependents rebates that were removed by Parliament [in November] Budget, were yet to be factored into the Alesco [government payroll] system hence it was unlikely this has caused the pay deduction on” thousands of government workers this week.

He said the statement from the office of the Prime Minister and Department of Finance about the ‘technical glitch’ was the main cause of the pay cut.

“​As confirmed by the Finance Department that administers the Alesco Payroll, the Alesco system was not reconfigured on time to make K20,000 tax free threshold permanent hence, it reverted to K17,500 on 1 January 2024, thereby resulting in a reduction in the net pay. That was identified and resolved hence will be fixed for Pay two,” Mr Koim said.

He further said there is no tax increase on workers who pay salary tax.

“​Apart from the removal of dependents rebates, which is yet to come into effect, the government has not raised any tax rates in Personal Income Tax and Goods and Services Taxes that would affect the average people and the working class in Papua New Guinea, “Mr Koim said.

Opposition Deputy Leader Douglas Tomuriesa said “someone has come with a story that, there was glitch in the system, how can it become a glitch in the system when it was passed by the government in [November] 2023, it cannot be glitch, it happened because it was introduce on the floor of Parliament.”

The Peoples National Congress parliamentary leader Peter O'Neill said “issue of tax glitch is another lie. During the debate in Parliament in November we clearly outlined the façade of increasing the zero tax rate to K20, 000 per person on their salary.

“In reality, they removed all the rebate on the dependents and marginal increases in other salary levels, so all in all there were increases in taxes.”

But the IRC Commissioner General said “that the dependents rebates removal would have minimal impact on the taxpayers,” but that “law has not been gazette and hence has not come into effect.