About to Fall

"Reduce, Abolish or Defer"

Territorians Fear Tax-Axe About to Fall

Most P-NG Territorians are reconciled to a belief that the Australian Government will try to introduce income taxation in the Territory in 1959—probably with the financial year begin ning July 1. But not all of them are reconciled to letting it

happen without a fight.

k NUMBER of organisations— \ including the Port Moresby v Chamber of Commerce are fighting funds, and mem “rs of these organisations are sked to send donations. A public rotest meeting will be held in Port foresby this month.

The object is to have the proposed ixes reduced, abolished or deferred.

Their fears are based on a “Review [ Territory Finances”, a report repared at the direction of the [inister for Territories some time ?o. which has been circulating round the Territory in abridged n*m for some months.

The expert who compiled the eview based his proposals on rais ig £1,300,000 from income tax but saucing customs duties by £600,000, ‘though not all at once. The in fme tax rate proposed is 4/- in the [company tax and 60 per cent, of le Australian rate for individuals.

That old-fashioned plank of istice, that there should be no tax feion without representation, has me by the board in post-war years. apua-New Guinea is now the only lajor territory in the South Pacific here income taxation does not perate. All of the other territories ave income tax, although none of lem have self-determination or any [ the social-security benefits of ich heavily-taxed countries as the hited Kingdom, Australia or New ealand, where a large slice of tax loney is directed towards pensions ad other benefits.

Taxes are Forever If direct taxation is to be intro uced in Papua-New Guinea, 1959 iems to be a most likely year. The linister has already informed isidents that, in future, greater mphasis will be placed on self ipport; the big oil companies seem to stay there in Papua for Pother year or so; and the level f prosperity due to high copra rices and reasonable prices for ther commodities, is good.

If income taxation were the only lx, it would be the most equitable lx of all. But it never is the only ix. and the risk is not in its year

of introduction, but in the years that come after.

Once on the statute books, a tax can be increased, amended and generally fiddled with. A Territory Treasurer 10 years from now, wish ing to increase revenue, will not stop to consider that import duty was originally reduced in order to make income tax less of a burden, for Territorians; or that there were once good reasons for fixing the in come tax rate at 60 per cent, of the Australian rate.

It is an historical fact that once introduced, a tax is rarely repealed and that rates are seldom reduced but are, to the contrary, increased.

Australian Sales Tax is a case in point. Introduced in 1930 simply as a temporary Depression measure, with a modest 21 per cent, tax on

(Continued on page 18)

the cost of goods manufactured in Australia, it netted in the first year £3,472,854 for revenue. By 1939 it was regarded as a permanent method of raising revenue, and was bringing in a comfortable £9,300,000 per annum.

Now, of course, it is quite in dispensible, and in 1955 (the last year for which figures are avail able) it contributed the handsome sum of £100,446,000.

The rates are no longer 2 h per cent., of course. The rate now varies from 12i per cent, for utility com modities, to 30 per cent, on those items which the Australian Tax gatherer regards as luxuries.

No Treasurer would consider quitting this lucrative field of revenue, although the purpose for which this tax was introduced was fulfilled 25 years ago.

More Pay, More Say

It is undeniable, of course, that sooner or later, Papua-New Guinea residents will have to take a bigger share in paying the Territory’s way. In 1957-58, internal revenue amounted to £4,725,031, and Aus tralia’s grant was £10,796,000figures that speak for themselves.

But whether the flat-footed in troduction of income taxation as the first step toward getting more balance into this situation is the correct step, is another matter.

Each non-native Territorian already pays something like £l2O per head in indirect taxation—but the whole of the internal revenue of the Territory scarcely pays the salary bill of its Public Servants. If the Territory had to live within its own earnings (as before the war the Mandated Territory did, and Papua did to within £40,000 per annum) and had no Australian grant, the whole fabric of administration and expenditure would have to be cut down by two-thirds.

Under the present set up. the Commonwealth Government is pay ing for two-thirds of the cost of running P-NG, but it has all the say cm how the total revenue of the Territory is to be snent. In 1957- 58, £4,296,000 went in salaries (or payments in the nature of salaries”) of Public Servants, of whom there are now about 3,000. About £4,000,000 was spent on capital works, and a large proportion of the rest went on native welfare.

The total non -native population °t P ; N o G is 18,500 Europeans and about 3,000 Asians. The real pro ducers of the Territory probablv can be counted in hundreds, but between them they exported goods valued at £10,898,000 in 1957-58. In addition, in recent years about £2,000,000 has been spent annuaffy

in Papua by the oil search com panies.

The rest of the population—that is, those other than the producers and the 3,000 Public Servants and their families —live on retail trade, and in providing services.

Territory's Unreal Economy

Which ever way it is looked at, the economy of P-NG is unreal. It never will be anything else until the people who live there have some say in how revenue is to be spent, and assume some responsibility for spending it; or until income more nearly approximates expenditure— and not even the most fantastic rate of internal taxation could do that at present.

In the meantime, as the Territory is permitted to defy all the economic laws in relation to income and expenditure, it is pointless for any official to indulge himself with futile little sums that aim to prove how much the average Territorian is paying—or should pay—towards P-NG upkeep.

Out of its own terrifying generosity, the Australian Govern ment has created a monster that is chewing up £16,000,000 to £18,000,000 per annum. All residents, native and non-native have benefited from this largesse but that doesn’t make them enthusiastic about paying more to satisfy the monster in whose creation and upbringing they have had no part.