Government Expects 14.5 Percent Rise in State Revenue

The government plans to raise $3.51 billion in state revenue in 2014 in order to finance a $3.4 billion draft budget, an increase of about 14.5 percent compared to the previous year, when the government raised $2.98 billion in revenue, according to a draft of the budget.

The draft budget, which could be approved as early as Tuesday by the 68 CPP members of the National Assembly, represents a 13 percent year-on-year increase in spending.

About $2 billion of state proceeds will come from taxes, with the most significant increase in revenue coming from property and income taxes. More modest rises are expected in taxes on petroleum, casinos and businesses. Some $350 million in revenue will come from official fees on forestry and fishery licenses, mining concessions and the lease or sale of state property.

Cambodia will also take on $920 million in new debt to foreign governments next year in order to cover state spending, the same amount that it borrowed this year. The loans will come from China, Japan and South Korea, according to the draft budget.

Cheam Yeap, the head of the National Assembly’s banking and finance committee, said that the increase in revenue would be used to improve education, vocational training, health care and the expansion of industry to promote job growth.

Along with a 17 percent increase in planned spending on the ministries of interior and defense, which together will account for $489 million, the draft budget calls for a 37 percent increase for the Social Affairs Ministry to $141 million, and a 20 percent increase for the Education Ministry to $335 million.

Mr. Yeap said that despite the budget increases, the amount of money was still not enough. “If we did everything we want to do, this income is not enough,” he said.

The most significant increase in revenue will come from income tax, which is set to increase 15.9 percent to $81.62 million, and property tax, with a planned increase of 53 percent to $23 million. Taxes on petroleum are set to increase 7.9 percent to $15.17 million, while taxes on casinos will rise 8 percent to $2.24 million, according to the draft budget.

The opposition CNRP claims that the government is losing hundreds of millions of dollars in potential state revenue due to weak tax collection mechanisms that allow for widespread graft, particularly among customs officials. The opposition has also called for a major hike in the taxation of land and casino concessions to increase revenue.

Yem Ponhearith, lawmaker-elect and spokesman for the opposition CNRP, said that he was concerned over the level of foreign debt being taken on by the CPP, adding that only through reining in corruption could the government significantly raise its domestic revenues.

“Borrowing money from other countries is not good because we will owe more and more debt,” Mr. Ponhearith said.

“If the government can’t eliminate corruption, the tax collection cannot be executed as planned,” he added.

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