Roadside market in rural Papua New Guinea. Photo: RNZI / Johnny Blades
A Papua New Guinea academic has welcomed the move by the government to drop the Goods and Services Tax (GST) from many basic food items.
The government announced in its Budget that it was cutting the 10 percent GST on products like rice, tinned fish, tea, coffee, flour, and noodles.
Andrew Anton-Mako, who is with the University of PNG and the Australian National University's Development Policy Centre, had earlier called on the government to make such a move to ease the pressure on those on low incomes.
He said the tariff came off all the food goods he had recommended except chicken, "so I'm glad to see the PNG government take on board recommendations that we put forward."
Anton-Mako estimates the move will cost the government about 210 million kina (around NZ$88m), but he said improved returns, mostly on resource sector exports, are helping to boost the state's books.
He said would have liked to see the government go further and remove GST from medicines, particularly for items dealing with common diseases such as malaria.
Anton-Mako said this is a good short term measure, but that the critical point is what happens in the long term.
One of the best steps the government can take is to improve the economy's structure so the costs of goods services, and delivering those goods and services, drops, "so the reform should be on the cost of service delivery in the country."
Anton-Mako partly blamed poor service delivery spending on the government entrusting MPs directly with 2 billion kina of money, through what has been dubbed 'the slush fund,' calling it ineffective spending.
