This is the big question isn`t it?
I am no economist so will not pretend to know and go on about the economics of it all. This week the PNG Government ammended its laws so that the developers of the LNG project in PNG will not pay income and GST tax. The opposition is saying it is bad for the economy because the country will be mission out on internal revenue. But the government is saying, yes it`s true, but the loss will be made up as the project goes on!
I think both are true but you have to decide. It`s a question of choices. The best choice right now for the sake of the project to go ahead I think the Government made the right decision.
The other big question is will this decision affect families in PNG? In a positive way that is.
The income tax system in PNG is a progressive one, meaning, the more you earn, the more you pay! I think it is totally unfair system. You are paid more because of you r qualifications or training and a large chunck of it goes to the national purse to support those not working. If someone was working for a multinational company and is highly paid, I am sure he or she would prefer to keep it all (yes I know its greedy!). So the decision therefore to exempt developers of the PNG LNG project from paying income and GST tax was a good one as family members of those employed by the developers during the life-span of the project would not need to pay income tax and will take their whole pay packet home.
Does it make sense?
They will end up paying GST in the supermarket though!