The increase in the Corporate Income Tax set for 2023 for commercial banks has once again received skeptical remarks, this time from the bankers.
The most recent was from the outgoing Chief Executive Officer (CEO) for the BSP Financial Group Limited (BSP) Mr. Robin Fleming, who said that the increase will only lead to negativity in the banking sector.
He said the country needs good and health competition in the private sector, which includes the banking sector, and that such increases to raise a revenue of K240million to fund core government services as per the 2023 National Budget, has the potential to lessen competition and the benefits that come along with it.
“PNG needs more competition and to increase the taxes on the banking sector from 30% to 45%, does nothing to incentivize anyone else to come into the country and open up banks, it possibly might accelerate the desire of others to continue their exits,” said Mr. Fleming.
Fleming also added that the increased taxes will be of no benefit for the majority of Papua New Guineans.
“For K240million, I am sure that there are other things that can be done rather than taxing the banks.”
Fleming further stressed that the country has a very high population, and more banks should be encouraged to invest in order to provide banking and financial services to the masses, especially to the people in the rural areas.
It’s not only that, banks are needed to also support government implement initiatives as well like financial literacy and support the Small and Medium Enterprises grow.
Meanwhile, this increase in the Corporate Income Tax came about so to gradually do away with the Additional Company Tax that was introduced this year, which has a baseline value of K190million per year for all banks holding more than 40% market share.
This increase in the Corporate Income Tax will come into effect on the 1st of January 2023.