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PM calls for tax co-op as Covid-19 costs set to soar

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Prime Minister Hun Sen is speaking while presiding over the closing ceremony of the Ministry of Interior’s annual meeting on February 23. SPM

PM calls for tax co-op as Covid-19 costs set to soar

Prime Minister Hun Sen has called on relevant institutions to work with customs and excise units to ensure that tax collection goals are met and that action is taken against tax evaders, as the government seeks to shore up the coffers for its ongoing battle against Covid-19.

Presiding over the closing ceremony of the Ministry of Interior’s annual meeting on February 23, the premier revealed that the owners of about 5,000 vehicles have not paid their levies – amounting to $50 million.

Hun Sen instructed competent institutions to beef up collection of state revenue and to avoid unnecessary spending, stressing that collaboration in support of tax and customs units, and other revenue collectors would be “necessary”.

“If tax evasions continue and we cannot recoup the money, it will be a disaster for our country,” he said.

He pointed to what he suggested was the efficacy of his previous warnings to tax cheats. “I said earlier that by July 2022, there will be no more tax-evading vehicles and right-wheel drive ones on the road. After that decision, we had collected incomes from 5,993 untaxed vehicles, netting $51.6 million [as of February 22],” he added.

He said the crisis meant that the government was unable to save any income, and was having to dig into its reserves, even if most revenue collection targets are met.

“But since it arrived, we have not earned enough [in state revenue] for our expenses. Even if we could earn more than $400 million per month, the money we had saved in the past is drying up.”

The premier instructed officials to delay public spending unless absolutely necessary. “My order is that even if you already had an expense plan, if possible, just delay it and wait until the Covid-19 situation eases,” he said.

Royal Academy of Cambodia economics researcher Ky Sereyvath said Covid-19’s persistence as a pandemic threat could jeopardise the collection of taxes and customs duties.

“There’d be a risk of business closures, which would affect tax collection. Moreover, decreases in consumer incomes due to fears of this crisis would also reduce imports of luxury goods such as cars, which would in turn lower tariff revenues,” he said.

However, Sereyvath believes that the shocks from the pandemic are now minimal, which he attributed to the government’s decision to allow Covid-19 patients to receive treatment at home, and provide private businesses with licences to sell pharmaceuticals for the coronavirus to the public.

At-home treatment and the provision of up to four doses of coronavirus vaccines for eligible patients are part of the government’s Covid-19 management strategy, he said, pointing out that although infections are again on an upswing, so too are recovery rates.

“In the short term, we’ll be seeing this trend, but in the long run – towards the end of 2022 – the Omicron [variant] may no longer have a significant effect on government revenues,” Sereyvath said.

The prime minister shared that in January alone, the state generated about $470 million in revenue, which he said may not cover all planned expenditures.

Still, he said, the government intends to continue cash transfers for the needy, for which it is currently spending $40 million per month. The government will also continue to provide free treatment for Covid-19 patients at hospitals and treatment facilities.

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