Government Looks To Create A ‘Culture’ of Taxpaying

The government may begin collecting taxes from owners of residential dwellings in 2010, officials said, but some criticized the timing of the move as the nation recuperates from the global fi­nancial meltdown.

Owners of residential property throughout Cambodia would annually pay 0.1 percent of the property’s market value as as­sessed by the Ministry of Fi­nance, according to the draft law that is included in next year’s national budget.

The draft law is currently at the National As­sembly, which is slated to debate the legislation on Monday.

Finance Ministry Secretary of State Chea Peng Chheang said the purpose of the draft law is to establish a “culture” of paying taxes in the nation that currently has no taxes for simply owning property. He admitted the tax rate was low but said the government wants to start small.

“In Cambodia, we have never paid a residency tax, but now we want to make it,” he said yesterday. “The government will not, in the first year, get very much from the tax but it is just making a culture of paying a residency tax.”

Mr Peng Chheang said the collected funds would finance infrastructure projects and that if the law is ratified the ministry would set up a committee to begin evaluating property values countrywide. Only households valued at more than 100 million riel, or roughly $25,000, would be taxed, the draft law stated.

Spokesman for the Ministry of Land Management Nun Theany said that in Phnom Penh alone there are more than 183,000 residential units, including villas, houses and apartments.

According to article 14 of the 2010 National Budget, the law would exempt certain property owners from paying the tax, including the government, charities, foreign governments and international organizations.

SRP lawmaker and spokes­man Yim Sovann said the opposition party does not support the new tax, believing it may hamper a real estate market still recovering from the global financial

“This is putting more burdens on people’s expenses, which are facing a crisis,” Mr Sovann said

“It could not solve the economic crisis but just make all people, rich and poor, die.”

Mr Sovann said instead of raising new taxes the government should seek to clamp down on corruption and improve the collection of existing taxes.

Saroeun Soush, managing director of Asia Real Estate Property Company, echoed Mr Sovann’s comments, saying the potential tax could affect poor owners and real estate companies with large holdings of property.

“For the rich it is fine, but the poor will feel more impact,” he added.

 

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