Dear Editor,
I’m writing to address the misleading information our government is spreading about the PGST and its impact on our community. As grassroots consumers, we feel it’s crucial to clarify the facts.
The government claims that PGST businesses are paying more taxes now than they did before. This isn’t true. Businesses can either claim credits or refunds on their PGST payments, so they aren’t really paying more taxes.
For the first time, PGST businesses are now able to deduct their company expenses before the Business Profits Tax (BPT) is assessed on their profits. Allowable deductible expenses include employee salaries, utility bills such as power, water, and wastewater, fuel, communications, repairs and maintenance, legal fees, advertising costs, donations, rent, land purchases, and many others as outlined in tax filing form 502.
In many cases, the government has ended up issuing refunds to businesses for their overpayment of taxes on a quarterly basis. Ultimately, the Ministry of Finance’s financial records indicate that in 2023 large companies and corporations paid approximately $3,070,603 million in BPT, which accounts for only about 6% of total tax revenues. This demonstrates that big businesses are indeed paying less in taxes now than they did before. The $17,535,334 million collected in PGST in 2023 represents consumer tax payments that businesses simply collect on behalf of the government.
Furthermore, the government says that PGST funds the child raising and retiree subsidies and employee refunds given out this election year. That’s simply false. The child raising subsidy comes from 10% of alcohol and tobacco excise taxes. The employee refunds come from the wages and salaries taxes withheld. These are different funding sources established by other laws, not earmarked from the PGST.
It’s important that this information is made public. The people of Palau deserve to understand how the burden of the PGST is ultimately borne by the consumer – by the people of Palau who can least afford it. Instead, we are shown misleading graphs and numbers that don’t match what the Ministry of Finance reports.
Transparency is essential, and we call on our leaders to provide accurate information to the people. Sincerely,
/S/
Elbuchel Sadang
Former Minister of Finance