What the IRC does and doesn’t do

FACT CHECKS: COMMON MISUNDERSTANDINGS ABOUT THE IRC

The Internal Revenue Commission (IRC) plays a crucial role in Papua New Guinea’s development, but its responsibilities are often misunderstood. Here are key clarifications to common misconceptions:

Fact 1: IRC is responsible for collecting taxes. The IRC’s primary role is to administer and enforce tax laws in Papua New Guinea. It ensures taxes are collected in compliance with the legislation enacted by Parliament. The IRC does not determine how much tax individuals or businesses should pay—this is decided by Parliament through tax laws. For example, Parliament determines the tax rates for SMEs and large corporations, not the IRC.

Fact 2: IRC is not responsible for lowering or increasing tax rates. Adjustments to tax rates, whether increases or decreases, are decided by Parliament. The IRC’s role is to implement and enforce these decisions. It has no authority to change. Department of Treasury is responsible for tax policy formulation. IRC can propose or offer advice only but it is up to Department of Treasury and ultimately Parliament to make legislative changes.

Fact 3: IRC is not responsible for how tax money is spent. The taxes collected by the IRC are remitted to the Waigani Public Accounts. Decisions on how these funds are allocated and spent fall under the National Government’s budgetary processes. The IRC is solely focused on collecting taxes, not managing government expenditures.

Fact 4: IRC is not responsible for inflation or price control. Inflation and the prices of goods and services are influenced by global economic conditions, market forces, and national policies. The IRC has no role in regulating or controlling prices. Its sole mandate is to administer and enforce tax laws.

Fact 5: IRC staff, including the Commissioner General, pay the same taxes as everyone else.
IRC staff members are taxpayers, too. They pay the same tax rates on their salaries as all other citizens and experience the same tax burdens as the public.

Fact 6: Not everyone pays the top bracket of 42%. Only the top income earners earning above K250,000 pay that. And those earning below 20k per year do not pay tax – thanks to the Marape Government. There is a progressive method of calculating your income tax using a table.

Understanding these distinctions is critical. There is a lot of misinformation being circulated by people with vested interests and those who refuse to educate themselves on these facts.

There is rich information at IRC website so care to check it out: https://irc.gov.pg/

Authorized for Release

Sam Koim, OBE
Commissioner General
Internal Revenue Commission

Source: LinkedIn