Law amended: City Authorities will now get 25 percent of provincial GST portion

Parliament has formalized the redistribution of a portion of Goods and Services tax (GST) to city authorities in Papua New Guinea in a move aimed at ensuring that the authorities are better funded.

Law amended

The amendments to the Inter-government Relations Functions and Funds Amendment act tabled today by the Kokopo MP Ereman ToBaining Junior gives city authorities of Lae, Mt. Hagen and Kokopo the right to be paid 25 percent of all GST generated by their provinces.

“In future, when city authorities are created, similar provisions will be inserted in the law as is now for Lae, Kokopo and Mt. Hagen,” ToBaining said.

Since 2019, city authorities have been allocated portions of provincial GST under MOUs signed between the Internal Revenue Commission, the Provincial Governments and the authorities.

Lae city example

For Morobe, Lae City Authority has replaced the Lae City Council as the municipal authority with its with a large portion of its funding coming from GST.

Deputy Prime Minister and Lae MP, John Rosso, in a parliamentary address, commended the Inter-government relations minister, the governors for facilitating the changes in law.

“These arrangements, in no way take out money from our national government coffers,” The Deputy Prime Minister said. “It is an arrangement that is paid to our provinces already. We just take a portion of them and allocate it to the cities to ensure that they are run properly.

“In 2017, we moved forward with the City Authority concept in 2019. We now have only 94 staff running the city. Previously, we had 600 people doing nothing. We have now saved K7 million.

“We now collect our own internal revenue and now we have better roads, better streetlights, better schools better health services, because of what that original MOU designed and achieved between the Prime Minister, the three governors and the IRC Commissioner,” he added.

Past and present

Between 2002 and 2003, Morobe Governor, Luther Wenge, in a previous parliamentary term, successfully negotiated the retention of 60 percent of GST collected within the Morobe Province. This paved way for an additional arrangement with the Internal Revenue Commission and the Morobe Provincial Government nearly 20 years later for Lae City to be given 20 percent of Morobe’s GST.

The Western Highlands and East New Britain then followed suit with each city authority being given their own GST allocations.