Administrative problems of the provincial sales tax on beer in Papua New Guinea
| Author | T. Ord |
| DOI | http://doi.org/10.1002/pad.4230010104 |
| Published date | 01 January 1981 |
| Date | 01 January 1981 |
PUBLIC ADMINISTRATION AND DEVELOPMENT,
Vol.
1,
15-23
(1981)
Administrative problems
of
the provincial sales
tax
on beer
in Papua
New
Guinea
T. ORD
Adminirtrative Staff College
of
Papua New Guinea
SUMMARY
With the establishment
of
provincial government in Papua New Guinea, the Organic Law
has conferred
on
the provincial governments the authority to raise revenue using local
revenue bases including retail sales taxes. These taxes have significant advantages and a
sales tax on beer has particular benefits in P.N.G. in terms
of
potential yield and ease
of
administrative management. The tax is levied on the two breweries and the breweries
collect the tax at their breweries and wholesale warehouses on behalf
of
the provincial
governments.
For
the brewery with the dominant share
of
the market the arrangement
under which it collects the tax for a commission and pays over quarterly to the provincial
governments brings financial advantage. The brewery with a smaller share
of
the market
and localized sales is less likely to
be
benefitting by the arrangement.
For
the future given
expected beer consumption a change from a quantity based tax to
ad
valorem
rates would
be financially advantageous to the provincial governments, and would reduce the need for
some provinces
to
seek tax sources elsewhere, but experience shows the general benefit
of
raising the tax, not at the point
of
final sale, but
on
the wholesaler
or
manufacturer.
INTRODUCTION
The Organic law of Papua New Guinea (P.N.G.) and the philosophy embodied
in
the Constitution resulted in the establishment of provincial governments which
are to have, and
in
some cases already have, powers to spend and collect funds
totalling some
K65
million a year (estimate for
1979
Office of Implementation
budget figure plus N.P.E.P. provincial projects). Some provincial governments
already have
full
control of their budget expenditure while others come under the
Department of Provincial Affairs (Office of Implementation), and as the
Department of Finance becomes satisfied with a province’s ability to monitor and
control its funds
so
more central government functions
will
be transferred to the
provinces and the funds
in
their hands will have been increased accordingly.
Obviously the provincial governments also seek financial autonomy and
although
in
any country central governments jealously guard their sources of
revenue, the ability to
in
fact hand them over to the provincial authorities is
limited especially
in
a less developed country. The central government tax sources
are income and company tax (direct) and the import duties and excise taxes
(indirect). These constitute over
90
per cent of tax revenue
in
P.N.G. and are
unlikely to shift
in
any substantial way to provincial authorities both because of
their size and their base structure.
Mr Ord is a Principal Lecturer at the Administrative Staff College, Boroko, Papua New Guinea.
0
1981
by John Wiley
&
Sons, Ltd.
0271
-2075/8
1/01
001 5-O9$0
1
.OO
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