For P-N. Guinea

Now A “Hot” Question

Income Tax

IT is possible—even, at the momenn probable—that taxation of in comes in Papua and New Guineis which was approved in principle fccf the Australian Cabinet in 1957—win commence as from July 1, 1958.

Most Australian Ministers am high officials, seeing the high profitf which P-NG traders make out o P-NG’s national income (two-fiftM: of which represents Australias bonuses), are wholly in favour of in. come taxation.

But action has been deferred bee cause of the practical difficulties it applying the system to the politicos economic set-up in P-NG. Here an some of them, with the answers supi plied by the pro-tax advocates: P-NG people already are taxe: heavily through Import Duties. ..

ANSWER: No more heavily thas in Australia, where both impo;c duties and income tax apply.

Private enterprise will he dus couraged, especially in planting. ..

A: Wipe out the export duties o copra, cocoa, coffee, rubber, and tH; gains thus made by the plants should about equal his income tae The tax will fall heavily upey the traders—and most of the smallV new enterprises in P-NG now aw: being financed from traders’ surphl profits. . . A: As these big profifl come mainly from Australia’s annuu £lO million donation to P-NG proportion of them should go baoi to P-NG in income tax.

Taxation of the incomes of P-NV public servants will seriously distuw. the whole basis of their preset salaries and allowances. . . Thee appears to be no answer to that om It could be that an increase : Public Service pay to take care ■ increased taxation would be so larji as to absorb much of the planmr income tax.

The matter is under urgent rn view. It is possible that the two mas difficulties (disturbance of the pubic service, and discouragement of pm vate investment and enterprise) mu cause further postponement of tit taxation plan.