1 Oct 2002

PNG government considering solutions to court ruling on validity of VAT laws

10:41 am on 1 October 2002

The Papua New Guinea government is considering the return to provinces setting their own goods and services tax after a court ruling declared the national Value Added Tax illegal.

The court ruling puts the government's recently passed budget in jeopardy as it will lose 151 million US dollars in annual revenue.

There are concerns in parliament that the government will introduce a userpays tax on public services to makeup for the revenue shortfall.

Our correspondent in Port Moresby, Peter Niessi says the government may return to the previous system of provincial goods and service taxes.

"One of the things they tried to deal with was that it wanted to cut away the provincial governments' liberty to come up with a sales tax or sales and services tax. The Internal Revenue Commissioner indicated that he'd be going back to the drawing board and then determine what he was going to do."