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Finance minister ‘to tackle tax collection’

Finance minister ‘to tackle tax collection’

The minister of economy and finance has announced his intention to increase government revenue by half a per cent of GDP through improved collection practices, citing the need to manage debt and “reduce reliance on foreign financing”, state news outlet AKP reported yesterday.

According to AKP, Finance Minister Aun Porn Moniroth said last week that the ministry would make gains by shoring up its administration, but officials from the ministry and the General Department of Taxation (GDT) declined to comment on the details of the plan yesterday.

An April report from the Asian Development Bank said that the administrative weaknesses of the GDT made it one of Asia’s least effective revenue collection agencies.

Preap Kol, executive director of Transparency International Cambodia, said in an email yesterday that the new push had the potential to generate substantial revenue but would have to contend with a “culture of corrupt practice” among tax collectors.

“Our general observation is that tax or custom officers are usually wealthier than other officials in a shorter period of time, although their government salary scale is not that much different,” he added.

If applied to 2013 GDP estimates, the goal would have added about $78 million to government coffers, a bump of less than 5 per cent of last year’s total revenue. According to opposition lawmaker-elect Son Chhay, that amount would be “meaningless”, barely keeping up with inflation.

“The government has to [take] the revenue collection from the current 10 per cent [of GDP] to at least 18 per cent,” he added, estimating that corruption and inefficiency alone sapped about 6 per cent.

More optimistic, however, was independent economist Kang Chandararot, who allowed that the amount was small but “achievable”, and could be scaled up later.

And despite issues regarding transparency and reluctance among both businesses and individuals to disclose incomes, bolstering domestic revenue would be especially important when ASEAN economic integration in 2015 reduces import tariffs, he added.

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