Transcript
PNG's Forestry Industry Association says increasing the tax could jeopardise many of the 15,000 local jobs the sector is understood to directly provide.
The Association's Bob Tate says the tax rate has been made unsustainably high and most logging companies are seriously considering their future in PNG.
"Some years ago now industry and the government negotiated a framework agreement for export tax - 28 and a half percent. The government now proposes to increase that at today's export prices to 43 percent which basically leaves absolutely zero cash flow to cover operating costs."
However the acting executive director of PNG's Eco-Forestry Forum, Mary Boni, says that for years logging companies operating in PNG have claimed to be making no profits.
But she says the loggers seem to be very successful and have branched into various other businesses, therefore the move by government to raise the tax is a good one.
"They're going into the second and third cutting of that forest now and so far we haven't seen any development in the area but people are still crying out for what was promised to them as a result of that development, for example aid posts and infrastructure and road building, those kind of things and that is yet to be seen in that area."
Striking a conciliatory tone, the Treasurer Patrick Pruaitch says the forest sector remains highly valued, having contributed 300 million kina in taxes last year
"And we will be talking and working with them to agree on some of the measures that are contained in the budget but working out a way forward for both the government and the sector and the last thing we want to do is have this sector closing down shop and putting off people of f jobs and all that so we want to work with them to look at how best we can survive in this situation."
The Governor of Oro Province, Gary Juffa, questions what difference the tax will make if there are no proper inspections of log exports, or scrutiny of transfer pricing, the invoicing used or companies involved.
"Who is going to enforce it, who is going to administrate it? It hasn't been administrated and enforced for the last thirty years. How are they going to do it? I want to see the details. It's just the government trying to win the people over just before the eve of elections, saying we are not with these guys, see, we are taking them on. But we all know who is controlling the political landscape in Papua New Guinea, it's the logging industry."
Mary Boni says if the raised taxes put logging companies, who flout the rules out of business, it will help curtail illegal logging.
However the Forestry Industry Association says claims of illegal logging in PNG are exaggerated.
