Reducing Personal Income Tax Will Increase PNGn Workers Buying Power

Referencing 'The Circular Flow Of Income' framework, one can see how reducing personnel income tax will put money back into the hands of PNGn workers by increasing our disposable income and increasing our buying power. This then leads to boosting domestic consumption which then contributes to aggregate demand.

Aggregate demand is the total spend into the economy which comprises of: government spending, firms spending, consumer spending, exports and imports.

In economics consumer spending contributes to aggregate demand or total spend into the economy. The economy does not loss by putting back money into the hands of us, the significant few PNGn workers. The additional cash in the hands of PNGn workers, we will then spend into the economy and becomes part of the consumer spending into the economy. This spending is part of injections into the circular flow of cash that power on the economy. Those making decisions must understand the grander business economics which will give them the justification and assurance to make this bold decision and take action to reduce personal income tax which will go a long way to empower and enable the 'Kings and Queens of Charity' in PNG.

It is good to note GoPNG of PMJM at least having this as an agenda as well as a timeline plan and condition now set to reduce PIT. The timeline is three to four years and the conditions is when PNG's economy reaches K150 billion milestone.

Reducing PIT should make a real difference directly to the lives of the employees and PNGns. This action is one of three actions that will put money into the hands of the people to spend into the economy and help in keeping afloat our economy.