Subnational Governments Urged to Boost Revenue Generation

Media release 27th July 2023.

Subnational Governments Urged to Boost Revenue Generation

Commissioner General of the Internal Revenue Commission (IRC), Mr. Sam Koim, fervently encourages Provincial and District Governments to actively bolster tax revenues within their respective regions. This call to action comes as the Western Highlands Provincial Government (WHPG) graciously donates a vehicle to support the IRC's vital work in the province.

Among the remarkable initiatives being spearheaded by the IRC is the implementation of the GST Section 65A withholding scheme across all subnational government entities and authorities, slated for rollout this month. A testament to its effectiveness, this intervention has already yielded a staggering 126% surge in revenue collection from that initiative alone during the initial half of this year, compared to the corresponding period last year.

In a symbolic gesture of commitment, the WHPG proudly presented its inaugural GST 65A payment of K1m to the IRC, representing two months of withheld GST from WHPG suppliers.

When presenting the cheque and the vehicle, Hon. Wai Rapa, the Governor of the Western Highlands Province, emphasized the urgent need for improved tax compliance, stressing that many taxpayers within the province are either delinquent or remitting insufficient amounts to the IRC. Through the donation of the vehicle, Governor Rapa pledges the full support of his provincial administration to enhance tax compliance activities within the province.

The IRC has taken on the significant responsibility of overseeing provincial taxation powers as per the Organic Law on Provincial and Local Level Government. However, the efficient collection of taxes in each province necessitates operational support. The Inter-Governmental Relations (Functions and Funding) (2010 Budget Amendment) Act 2009 allows for administrative costs to be accommodated from the GST collected in each province, an opportunity yet to be utilized by the IRC.

In acknowledging this fact, Commissioner General Koim remarked, "We have thus far managed with limited resources from the main Goods and Services Budget of the National Budget to execute all provincial revenue-raising measures. Amidst competing operational needs, we face certain constraints. Therefore, I extend my heartfelt gratitude to the Western Highland Provincial Government for their invaluable assistance in boosting internal revenues collected in the province."

Emphasizing the significance of prioritizing and supporting revenue-raising initiatives, Mr. Koim eloquently highlighted, "In the realm of private profit-making organizations, a prudent budget commences with income, followed by necessary expenditures, ultimately aspiring for a net positive position or profit. Regrettably, Government budgeting often takes a divergent path, where expenditure precedes the search for revenue. This approach leads to unfulfilled budgetary expectations, founded on assumptions without the means to back them."

Governor Rapa reaffirmed his commitment to ensuring that the people's tax contributions are put to meaningful use. Already, the GST sharing arrangement with the Mount Hagen City Authority is being instrumental in rejuvenating the third city to its former glory.

The significance of this modest yet meaningful event was witnessed by the WHPG Administration and the dedicated staff of the IRC.

Authorised for Release,

Sam Koim, OBE

Commissioner General