Gas Prices Rise as Tax Swings Into Effect

Revenues Raised By Tax Will  Pay For Roads

Cambodians saw gasoline prices rise Tuesday as a new tax to build and maintain roads took effect with the new year.

At a Total gas station Tuesday, the new price was 2,050 riel per liter for regular gasoline, up 100 riel from the day before. PTT (Petroleum of Thailand) prices for regular gasoline will rise 200 riel per liter, while Sokimex regular gas prices will rise about 250 riel per liter, officials from those companies said.

The prices result from a new tax of $0.02 (about 78 riel) per liter of gasoline and $0.04 (about 156 riel) per liter of diesel fuel ordered by the Ministry of Finance in November. Revenues from the tax will go to fix national roads and build new rural roads.

Funcinpec lawmaker Keo Remy said Tuesday the tax should have gone before the National Assembly for debate, as required by law. He said he would have preferred to raise the money through taxing casinos or cosmetics.

The new tax adds to existing gas taxes of 35 percent for import, a 20 percent “special” tax, a 3 percent “battlefield tax” first instituted during the civil war, and a 10 percent value-added tax, said PTT President Bin May.

Sokimex President Sok Kong said the new tax has relatively little effect on customers now because the price of petroleum in the international market is low. “But I’m worried that, when the price of petroleum increases, that plus the road tax will affect users very much,” he said. “We will raise prices more.” Sokimex buys its petroleum from Singapore and Thailand, he said.

Bin May said the road tax will increase the cost of a ton of gasoline to PTT by 27 percent for regular gas and 65 percent for diesel. But he said he does not plan to complain to the government.

“PTT doesn’t have plans to talk to the government about this issue. We will set the selling price based on the buying price and taxation.

“[But] we are in business. We like to make money.”

As a result of the new gas tax, some local companies are bracing for an increase in the cost of doing business.

Leang Dara, the mechanic at the Hotel Le Royal, said his hotel uses three private generators that consume 5,000 liters of diesel per day. “If the price of diesel goes up, the hotel will spend more money,” he said.

Cambodiana Hotel engineer Nop Sophal said that his hotel is still unable to use state electricity. The hotel uses 1,500 liters of diesel per day to power its private generator, he said.

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