Treasury Minister clarifies 2017 tax changes

Only two categories of high income employees will be affected by 2017 tax changes’ says Treasury Minister Patrick Pruaitch.

Minister for Treasury Patrick Pruaitch said today there has been a clear misunderstanding on taxation of employee provided housing in the 2017 National Budget, which has led to public confusion and controversy.

He said: “The 2017 National Budget only extended taxes that have been implemented since 2011 to include two new categories that encompass very high housing rentals.
“Corporate executives with employer provided accommodation where weekly rentals range from K3001 to K5000 and those in properties rented for K5001 or more will pay higher taxes depending on their marginal rates of tax.”

Mr Pruaitch made it clear that the 2017 budget introduced no new changes for other workers who have employer provided accommodation.
“I believe this had been clear to groups that I addressed after the Budget was introduced in Parliament.

“This change will only affect high income earners who are provided with expensive accommodation and it will raise around K6 million annually.”

Mr Pruaitch said these taxes introduced a greater level of fairness in the system because employees who receive housing allowances in cash are fully taxed at their marginal rates, while those with employee provided housing receive concessional treatment.
In a related measure, the Government has also decided to fully tax employer provided accommodation outside of Papua New Guinea because the current exemption for this category is overly generous and unfair from a policy perspective.