DISCUSSIONS are underway between the government, treasury, taxation authorities and relevant authorities to review the tax on retirement entitlements for public servants, says Public Service Minister Joe Sungi.
Sungi revealed this in Parliament on Tuesday when responding to question raised by Goroka MP Aiye Tambua, who called on the Government to review the tax on the public servants’ retirement entitlements.
Sungi acknowledged the concern adding that it was an important and timely issue.
He said discussions were already underway between the government, the treasury, taxation authorities and relevant agencies on the matter. Sungi explained that retiring public servants generally received two forms of payment which were their final employment entitlements, including leave and other accumulated benefits and their superannuation payout.
He noted that taxation arrangements differ depending on the nature of the payment and the beneficiaries involved.
Sungi said the Government was examining the broader implications of any changes, including the impact on state revenue, but confirmed that the issue was receiving serious consideration at the highest levels.
He added that the Government were aware of the concerns being raised by public servants and retirees and discussions were continuing on possible reforms. “We are looking at the matter carefully and considering the best possible advice from Treasury,” the minister said.
Tambua said he recently attended a police retirement function and was concerned by the amount of tax deducted from retirement payments.
He noted that many public servants contributed to tax throughout their working life, only to see a significant portion of their final payouts reduced through taxation.
He urged the Government to consider either removing the tax on retirement benefits altogether or reducing the rate to 10 per cent, stating that the retirees deserved to receive the full benefit of their years of service.
