"STIMULATE GROWTH IN LOCAL ECONOMY AND REDUCE THE SHELF PRICES OF BASIC CONSUMER GOODS"
In the 2024 National Budget, passed by Parliament on 28th November 2023, the Government has amended the Customs Tariff Act 1990 to remove the customs duties and taxes on some intermediate goods used as inputs into the manufacture and production of some basic consumer goods. These tax relief measures initiated by the Government, which PNG Customs Service (Customs) will implement have become effective from the 1st of January 2024.
These new tax relief measures are aimed at reducing the cost of production and manufacturing of some basic consumer goods. It is anticipated that the import tax relief and reduction in cost of production will be passed onto the consumers, when the shelf prices of the basic consumer goods in the local shops and retail outlets are cheaper for the benefit of our people who are consumers of these basic goods.
This initiative by the Government is also intended to support the growth of our domestic manufacturing industry. These tax measures will see a number of key items used as intermediary goods or inputs, for our local manufacturing industry, to produce final products be given tax relief where the Import Duty rates have been reduced to Zero Duty. This will stimulate growth in local manufacturing and attract investment by reducing the cost of production for local manufacturers.
These tax relief measures have come into effect on the 1st January, 2024. From our assessment these measures will have significant impact on our revenue collections in terms of revenue collected by Customs. However it is anticipated that improvements in compliance and enforcement will cover the loss in revenue collections by Customs in 2024 fiscal year.
Below are the list of the tax relief measures, being implemented by Customs, with the amendments to the Customs Tariff Act 1990 as per the 2024 National Budget, to assist our local manufacturing industry.
These new measures will see customs import duties and taxes reduced to Zero, for key items used as intermediate goods in the manufacturing and production of some basic consumer goods.
These tax relief measures will have the following benefits to our local manufacturing industry and consumers:
The above measures will reduce costs of production for local manufacturers, assist in generating growth and can be seen as indirect investment into the economy. It is anticipated that as a result of the removal of import duties and taxes on these intermediate goods and with the reduction in the cost of production, the final consumer prices of the finished products at the shops and shelves of retail outlets will be reduced.
The basic consumer goods include soaps, biscuits, breads and scones, canned pork luncheon meats, bottled drinks and beverages, chickens, packaged consumer goods, mattresses, and others. This reduction in cost of production when passed onto consumers will then help to alleviate the cost of living pressures experienced by our people due to the imported inflation on most imported consumer goods.
Above is the list of revenue measures that Customs have been implemented since 1st January, 2024. These revenue measures will reduce the Import Duty to Zero Duty for the above intermediate goods that are used as input goods for production and manufacturing of some basic consumer goods and products.
It is anticipated that the final shelf prices of these basic consumer goods at the shops and retails outlets will be reduced when the savings are passed onto the consumers. This will certainly alleviate the cost of living pressures experienced by our people from imported inflation with the consumption of imported goods and food products.
These measures will also foster more investment and growth into the local manufacturing sector in PNG. We believe this is also in line with the 2023 National Manufacturing Policy, ‘to raise manufacturing sector GDP contribution to 20 per cent by 2050’.
More growth and investment into the local manufacturing sector, is great for the economy as it generates growth and creates jobs. It is also intended that this initiative will stimulate further growth and contribute towards the achievement of economic growth aspirations set out in MTDP IV, to grow the local economy to K200 billion by 2030.