Government revenues totalled more than $700 million over the first four months of the year, an 11 per cent year-on-year increase, data from the Ministry of Economy and Finance (MEF) show.
In total, the revenue made by the General Department of Taxation (GDT) rose by about 30 per cent while revenue from the General Department Customs and Excise (GDCE) rose slightly, by about four per cent. Revenue from cities and provinces went up by 33.5 per cent.
Hiroshi Suzuki, CEO and chief economist at the Business Research Institute for Cambodia, said many international agencies such as the International Monetary Fund, World Bank and Asian Development Bank, are expressing the importance of continuous effort on taxation by the government, because this stable revenue is indispensable for the development of Cambodia.
“So far, especially with the assistance from the World Bank, the Ministry of Economy and Finance has made great efforts to increase tax collection. MEF and many donors made good cooperation to implement the Public Financial Management Reform Program, [a program to improve the government’s financial system and spending]. For example, in the field of customs, the World Bank provided ASYCUDA, a system to improve the tax collection at customs such as at Sihanoukville port,” he said.
“The capacity development of staff of GDT and GDCE is also very important for the government. The Japan International Cooperation Agency has dispatched many experts to GDCE to improve the customs system and the capacity of staff,” he added.
The president of the Cambodia Institute for Development Study, Kang Chandararot, told the Post recently that the construction sector can be make a big contribution to the country’s growth. “[The] increase in tax collection reflects reality as the construction sector starts to bounce back. In addition, [the] education sector has become an attractive [source for] investment during the last years, due to [growing] demand.”
Kang Chandararot said tax losses could occur because of the lack of developed collection systems, inaccuracy of business reports, and limited capacity of tax officers. “However, this cannot serve to estimate the exact loss [of] money.”
Stephen Higgins, former CEO of ANZ Royal Bank said that corruption is one among other factors—“capacity and capability in revenue raising areas is important. Improving and streamlining customs would make a big difference, and is something that most businesses would want to see.”
The opposition party, however, claims the government loses between $400 million to $500 million due to corruption by officials.
“The improvement of taxation is not an easy job,” Suzuki said. “Many developing countries, not only Cambodia, have been tackling this issue. I hope [that] both the government and donors will continue their efforts on this issue for Cambodia.”
At the same time, government’s expense budget [excluding the expenses for other projects that are not paid from the national treasury] is worth $443 million, a decrease of 5.8 per cent compared to the same period last year.