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Tax revenues on the rise

Tax revenues on the rise

121109_07
Cambodia's tax collection increased since 2011.   Photograph: Heng Chivoan/Phnom Penh Post

Cambodia collected $633 million in taxes over the first 10 months of this year, a 31 per cent rise from $483 million over the same period last year, according to the General Department of Taxation. However, an opposition watchdog claimed the amount is still far below the real tax rate, saying corruption is behind the low collection.

Speaking in a monthly meeting, Kong Vibol, director general of the General Department of Taxation, urged tax officials to enforce law and order to collect more revenues for the state coffers.

He said the country still has much room to grow in tax revenues, so it was very important to promote taxation law and the consequences of tax evasion to individuals, corporations, trusts, and other entities in order to encourage them to pay taxes.

Yim Sovann, a spokesman for the Sam Rainsy Party, told The Post last week that the country’s tax collection is far too low compared to other countries in the region. “If we look at government imposed taxes, we see they are very big. They have many types of taxes to collect from people.

However, the amount generated for national revenue is still low, just between 12 to 13 per cent compared to our neighbouring countries which collect between 18 to 25 per cent of their national revenue from taxes,’ he said.

He said the government should consider using more effective ways of battling corruption to generate more revenue. “So, both revenue and expenditure is not appropriate yet if we can fight or curb the corruption, we can gain an additional $500 million to $1 billion per year,” he said.

“What is important is that the government has to take efficient action in fighting corruption because our people pay more tax than the neighbouring countries – not only a lot of different kinds of taxes but also the high tax rate while the revenue for national budget is lower than them—why?” he asked.

“Lots of money has been diverted to individuals or groups of people – not the nation. It is a must for the government to consider the issue – fighting corruption,’ he added.

Olaf Unteroberdoerster, deputy director for Asia-Pacific Department of the International Monetary Fund said in October that Cambodia’s revenue performance improved in 2012, with direct and indirect tax collections expected to rise by 0.75 of a percentage point of GDP.

The fiscal deficit is projected to narrow to around 3.25 per cent of GDP, provided spending pressures are prudently managed. “Going forward, rebuilding government deposits starting with the 2013 budget remains a top priority, enabling Cambodia to better absorb adverse shocks,” said Unteroberdoerster. “From a longer-term perspective, greater mobilisation of fiscal revenues is imperative if Cambodia is to meet its vast development needs and maintain fiscal sustainability,” he said.

In late October, the government approved increasing the national budget expenditure to nearly 13 per cent for the year 2013 to $3 billion from this year from $2.7 billion, responding to the improvement of the economy.

To contact the reporter on this story: May Kunmakara at [email protected]

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