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Logo of Phnom Penh Post newspaper Phnom Penh Post - Land tax collection up over '07

Land tax collection up over '07

But a falling property market could cut revenues in 2009

THE government collected a record US$28 million in land taxes in the first nine months of 2008, compared with $21.2 million received in all of 2007, a senior minister said last week.

The government collects a four percent tax on land sales.

Im Chhun Lim, minister of land management, urban planning and construction, told the Post that the gains were mostly from a strong construction sector in the first half of the year.

He warned, however, that the global economic crisis and a falling property market in the second half could bring down next year's revenues.  

"We earned more income from land duties this year because of booming construction in the first half of 2008," Im Chhun Lim said.

From 2004 to 2007, Cambodia earned a total of about $40 million from land taxes, and officials say the increased collection shows progress over corruption.

Non-transparent

But Sam Rainsy Party lawmaker Son Chhay said that the reported figures are much lower than the actual amount collected by the ministry.

"I think that we could earn $100 million per year if the ministry managed the revenues properly," he said.

We earned more income ... this year because of booming construction.

He added that only about 35 percent of taxes are collected by the government, and that corruption and mismanagement is robbing the state of much-needed funds.

"The ministry should not use the global financial crisis as an excuse to explain any revenue shortfalls," Son Chhay said.

"I think that the income from land duties will not drop to below current income, although the construction sector has dropped 30 percent due to the global financial crisis," he said.

He added that better tax collection could help offset the government's  30 percent budget increase for 2009.

Cheng Kheng, managing director of Cambodia Properties Ltd, said the government's figures are high because land prices went up for the first three months of 2008. He expected a drop next year.

"I think the income will decrease next year if the current situation lasts long," Cheng Kheng said.

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