2025 Budget Introduces Tax Cuts and Reforms to Support PNG Economy
The Papua New Guinea Government has tabled its ambitious K28 billion national budget for 2025, featuring significant tax reforms aimed at reducing financial pressures on citizens and businesses. Treasurer Ian Ling-Stuckey presented the budget and accompanying amendments in Parliament today, emphasizing the government’s commitment to economic growth and fairness.
A key feature of the reforms is the removal of the 22% tax bracket for salary and wage earners, a move expected to simplify the tax system and provide additional take-home income for workers. The budget also proposes tax exemptions for superannuation withdrawals for retirees who have served for at least 15 years, offering greater financial flexibility for those leaving the workforce.
In the banking sector, commercial banks with profits under K300 million will benefit from a tax reduction, with rates lowered from 45% to 40%. Larger banks earning over K300 million annually will see a gradual decrease in their tax rates, starting with a reduction to 44% next year, eventually dropping to 35% in future years.
These adjustments address previous changes made in 2023, which saw tax rates for banks raised sharply from 30% to 45%. Treasurer Ling-Stuckey explained that the government’s latest proposals aim to rectify past decisions while fostering a competitive and equitable business environment.
The budget also maintains the K20,000 tax-free threshold for personal income, a policy designed to protect lower-income earners and ensure they continue to benefit from tax relief. This measure reflects the government’s focus on supporting households amid ongoing economic challenges.
With a focus on security and economic stability, the 2025 budget highlights the government’s intent to drive reforms that promote growth and sustainability. Discussions in Parliament will continue, with the proposed tax changes expected to play a central role in the broader fiscal plan.
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