The Association of Superannuation Funds of Papua New Guinea (ASFPNG) is not in favour of a recent NEC decision to introduce a banking levy as part of the Income Tax Act to collect K190 million per annum.
This decision will affect Bank South Pacific Group (BSP), the largest bank in PNG and the Pacific, of whom, superannuation funds on behalf of ordinary workers and tax payers are major investors/shareholders.
The imposition of this new banking levy will result in a decline in profitability, dividend payments to shareholders and a decline in BSP’s share price. This is a double blow for superannuation funds as annual crediting rates for members will be affected by lower revenues and portfolio balances.
K190 million represents between 2 to 3% annual crediting rate for the major Funds. Superannuation funds have benefitted from strong dividend payments and capital gains due to the strong performance of BSP over the years. Ultimately members of the Superannuation Funds are the losers.
This is unfair. BSP provides a lot of community service obligations in PNG and operates branches in non-profit making areas throughout the country. Will we expect them to close down such branches to adjust to this draconian imposition? Will we expect new costs to be passed on to the bank’s customers and depositors to make up this new tax? Will depositors be discouraged to keep their savings in BSP? Will potential new customers be turned away? These are questions we would like answered as they directly impact BSP’s performance, and that of the Superfunds.
There has been no consultation with us as an industry and we suspect with other key stakeholders within the broader community. We are cognizant of the Government’s endeavours to raise more revenue internally and will support initiatives that achieves this objective BUT not at the expense of our members, the ordinary workers of this country who are already doing it tough. Retirement savings with the Super Funds are the only real means of financial protection workers have. .PNG does not provide a social security safety net for its citizens unlike Australia for instance.
The Super funds fill this vacuum. Any government decision that lessens the prospect for growth and investment returns is not in the best interest of our members. We ask that Government withdraw this decision and allow time for wider consultation