Viewpoint: Peter Lowing, Partner, Leahy Lewin Lowing Sullivan Lawyers
The decision of the Supreme Court – Papua New Guinea Forest Authority vs Minister for Forests PGSC 24 of September 17, 2017 – regarding the question of the taxation powers of the National Parliament represents a significant legal development.
The decision cements the English common law position that there can be no taxation without representation, as established in the UK Bill of Rights of 1689, implying that only Parliament has the power to impose revenue-raising legislation. The matter was originally heard in the National Court, however, because it involved a constitutional issue, it was referred to the Supreme Court.
The facts of the dispute are relatively simple. The minister for forests, pursuant to Section 121 of the Forestry Act, sought by notice in the National Gazette to fix a levy in respect to the PNG Forest Authority at PGK20 ($6.24) per cu metre for all logs exported from the country. The plaintiff contended that the use of Section 121 of the act and Section 223 of the regulations did not allow for the imposition of the levy as presented in the National Gazette. Furthermore, the plaintiff argued that the regulations did not fix the inadequacy of Section 121 of the act in respect to compliance with Section 209(1) of the PNG constitution.
Section 121 of the act provides that the minister, after consultation with the board, may, by notice in the National Gazette, fix levies in respect to, but not limited to, all or any of the following areas of economic activity: follow-up development, provincial development, forest management and development, as well as the PNG Forest Authority.
A levy under Subsection 1 may be imposed on all holders of timber permits and timber authorities as specified in the notice. Under this section, the levy must be paid and collected as prescribed. The plaintiff argued that the levy was in reality a tax, and that the minister did not have the power to impose it. That is, the imposition was an administrative action as opposed to a legislative change brought about by Parliament. The government argued that the levy was not a tax, but that even if it were, the legislation and regulations in question would still sufficiently comply with Section 209(1) of the PNG constitution.
This section of the constitution states the common law principle of no taxation without representation, and provides the following statement regarding parliamentary responsibility: “Notwithstanding anything in this constitution, the raising and expenditure of finance by the national government, including the imposition of taxation and the raising of loans, is subject to authorisation and control by the Parliament and shall be regulated by an act of the Parliament.”
The Supreme Court maintained that the levy was in fact a tax as the term is defined in the constitution. Furthermore, the Supreme Court stated that Section 121 of the Forestry Act is a statute enacted by Parliament that authorises the imposition of a levy for the purpose of the raising of finance and expenditure for the national government to finance the PNG Forest Authority or other statutory authorities of the government. This, therefore, means that the provision comes within the terms of Section 209(1) of the country’s constitution.
However, the act removes the Parliament’s authority and control over the imposition of essential areas in the log export levy and vests those powers in the executive through the office of the minister for forests. However, some of those taxation powers are expressed in broad and ambiguous terms. Furthermore, Section 121 of the act and Section 233 of the forestry regulations are inconsistent with Section 209(1) of the PNG constitution, and were therefore declared to be invalid. In short, the Supreme Court confirmed the principles of English common law as codified in the constitution of PNG.
Read More from OBG
In Papua New Guinea
Ian Tarutia, CEO, National Superannuation Fund (nasfund)
In this Global Platform video, Ian Tarutia, CEO of the National Superannuation Fund (nasfund), discusses how super funds are helping the economy recover from the impact of the Covid-19 pandemic, especially as their investment plays an important role in preventing job losses, encouraging sustainable economic development and positioning Papua New Guinea as an attractive investment destination. In the coming years nasfund hopes to play a larger role in mobilising investment that capture a larger po…
In Legal Framework
Letter of the law: Recent legal reforms and their future impact on business
In light of the major steps taken to achieve Vision 2030, which is focused on the three pillars of a vibrant society, a thriving economy and an ambitious nation, in early 2021 Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud announced several profound legal reforms: the Personal Status Law, the Civil Transactions Law, the Penal Code of Discretionary Sanctions and the Law of Evidence. Each of these laws plays a role in enhancing and harmonising the legal ecosystem and reducing ambiguities. …
Focus Report: Exploring the role of women and youth in Africa's agriculture sector
En Français The last few years have seen marked developments in the dynamic landscape of African agriculture. The continent's cultivated land has expanded significantly since 2020, contributing to 52% of the global increase in cultivated area, with sub-Saharan Africa leading agricultural output growth. This report highlights the importance of transitioning to knowledge-based farming systems through initiatives from organisations seeking to achieve sustainable, inclusive and productive g…
“High-Level Discussions are Under Way to Identify How We Can Restructure Funding For Health Care Services”
Popular Sectors in Papua New Guinea
- Papua New Guinea Agriculture
- Papua New Guinea Construction
- Papua New Guinea Energy
- Papua New Guinea Industry
- Papua New Guinea Transport
Popular Countries in Legal Framework
Recent Reports in Papua New Guinea