Keep resource tax credit where it's earned, Western governor tells PNG Government

 Keep resource tax credit where it's earned, Western governor tells PNG Government

Money generated from resource extraction should stay in the provinces that produce it, according to a Papua New Guinea provincial governor pushing back against a new tax bill making its way through Parliament. Western Province's Taboi Yoto says he supports raising the infrastructure tax credit but wants assurance the funds will not be scattered across the country.

 

His remarks follow the tabling of the Income Tax (Amendment) Bill 2026 by Treasurer Ian Ling-Stuckey during Tuesday's parliamentary sitting on September 1, delivered together with the government's supplementary budget. Under the proposed changes, the infrastructure tax credit would rise from 1.25 per cent to 3 per cent, with proceeds routed to the national government via Treasury.

According to Ling-Stuckey, PNG's resource sector is expected to be worth about K50 billion in 2026, meaning the full 3 per cent credit could free up close to K1.5 billion for infrastructure spending, balanced by reduced tax collections elsewhere.

Breaking down the formula, the Treasurer said up to 1.25 per cent could be allocated to projects inside a resource project's footprint province, another 1.2 per cent could reach provinces outside that footprint, while the last 0.5 per cent must go toward the Autonomous Region of Bougainville for the full credit to apply.

Yoto praised the government for lifting the credit rate but was blunt about his reservations over its distribution.

"This 3 per cent, I think it should only be spent in the provinces where the resources have been extracted, and not to be used for projects elsewhere away from where the project or the resource is found and being extracted," he said.

Drawing on Western Province's long-running relationship with the Ok Tedi mine, Yoto argued that funds meant for his province have too often ended up funding projects far away.

"I have been observing that tax payers' scheme for OK Tedi, national government has been spending it all over the country," he said.

The governor said his province depends on the tax credit mechanism to build infrastructure, in place of relying solely on government-funded Public Investment Program allocations.

"The tax credit scheme of 3 per cent should all be spent in wherever the resource is found — the 97 per cent of the tax is coming to the national government, leave the 3 per cent to the provinces," Yoto said.