Unions demand delay to new income tax law, warn workers’ take-home pay at risk
The PNG Trade Union Congress, along with other workers’ unions, is calling on the Government to delay the implementation of the new income tax law, set to take effect in January 2026, as there has been no proper consultation with workers.
The call was made during a press conference today, where union leaders raised serious concerns that the new law could reduce workers’ take-home pay if it is implemented without clear guidelines and worker-protection measures.
Assistant Secretary General of the PNG Trade Union Congress, Anton Sekum, warned that the new law must not be used to disadvantage workers.
“This new income tax law must not become a backdoor wage cut for workers. It must not be a mechanism used by employers to reduce workers take on pay, harden benefits, or shift the cost of tax compliance onto employees,” he said.
Sekum stressed that tax reform must not turn into wage reform.
“The tax reform must never translate into wage reform. That is the warning to the government,” he said.
He said unions are concerned that without proper regulations, workers could face reduced take-home pay through changes to salary and benefits.
“Those risks include even reduction in take-home pay through restructured remuneration packages, removal or reclassification of non-cash benefits such as housing, transport, utilities, meals, and security,” Sekum said.
He also warned against taxing staff welfare loans and pushing tax compliance costs onto workers.
“Tax compliance costs must be absorbed by employers and the state, not pushed onto workers who are already struggling with rising living costs. We will be adopting a no-disadvantage principle.”
Under that principle, Sekum said workers must not lose income or benefits because of the new law.
“No workers' total remuneration or take on pay must be reduced because of the new income tax. No employer may unilaterally change salary structures without consultation and agreement.”
The Trade Union Congress is calling on the Government and the Internal Revenue Commission (IRC) to issue clear worker-protection regulations before implementation and to consult unions.
Sekum also warned of possible action if their concerns are ignored.
“We are prepared to take the following actions if our call on the government and IRC is not heeded. One is to call out a nationwide protest… or two, we will be pursuing legal proceedings to take out an injunction against implementation.”
He said the country must not face another crisis caused by poor implementation.
“It will not be from the unions. It will be induced by the implementation of the law as it is if they're not willing to consult us before implementation.”
General Secretary of the Public Employees Association, Ugwalubu Mowana, echoed the concerns, saying public servants were never consulted before the law was passed.
“When the law was passed, there was no mention of consultation between stakeholders, that includes the workers of this country,” he said.
Mowana said public sector workers are worried that the new tax could affect salaries and allowances, including recent pay increases.
“Instead of enhancing our take-home pay, the take-home pay may be reduced through the process from the gross to the net pay,” he said.
He also said government agencies are not ready to implement the law.
“There are no guidelines at the moment to guide the new taxation policy.”
Mowana called on the Government to immediately delay implementation.
“Government must stop the implementation on the 1st of January and allow consultations on the guidelines for the new tax to be implemented in the months to come.”
He described tax as a sensitive issue that directly affects families.
“This is going to affect our salaries. This is going to affect our families. So we are calling on the government to delay the implementation.”
Both union leaders stressed that unions are key stakeholders and must be consulted before any law affecting workers is implemented.
“We are workers. We have to be consulted,” Mowana said.
The Trade Union Congress says it will finalise its policy position in the coming days and formally present its recommendations to the Government and the IRC, urging dialogue to protect workers before the new income tax law is enforced.