5 Mar 2010

PNG's Philemon says LNG tax exemption sets bad precedent

4:17 pm on 5 March 2010

Papua New Guinea's former Treasurer Bart Philemon says the government's move to give participants in the Liquified Natural Gas project exemption from paying income tax is a dangerous precedent which deprives the country of revenue.

Parliament passed laws yesterday to exempt the interest withholding tax and GST from the Exxon Mobil-led LNG project.

The laws passed were amendments to the Income Tax Act, and the Goods and Services Tax Act.

The Prime Minister Sir Michael Somare has defended the amendments, saying they had been negotiated over a two-year period to bring in the investor.

But Mr Philemon says granting exemption on income tax was unnecessary.

"If you amend the Tax Act it means that a precedent is set for any other investors in big mining and so forth can also request the same treatment."

Bart Philemon

Sir Michael says the Government is jealously guarding the 30 percent corporate tax, which he claims will reap PNG a lot of benefits.