Gov’t Drops Plan To Tax Land in Capital Is Dropped

The government has withdrawn its plan to levy taxes on land in Phnom Penh next year, Prime Minister Hun Sen said Mon­day.

Hun Sen said that the government will take up the tax issue again at an “appropriate time” and repeated assertions that the government will not contemplate taxing farmers or the poor.

The proposed 0.05 percent tax on non-agricultural land in Phnom Penh valued at over $23,800 was part of the 2006 budget bill presented to the National Assembly earlier this month.

“We will wait until our people’s living standards improve, then we will charge [tax],” Hun Sen told re­porters gathered at the Minis­try of Interior.

“Now, we have taken [the tax] out, it will finish any suspicions,” he said.

CPP and Funcinpec lawmakers said last week that they were re­luctant to pass the new land tax, which had already been approved by the Council of Ministers.

Cheam Yeap, National As­sem­bly Finance Commission chairman, said that his commission had asked Hun Sen for permission to drop the tax plan, adding that he had informed National Assembly President Prince Ran­ariddh of the request, and that the prince had then raised the issue with the prime minister.

“I took [the tax] out,” Cheam Yeap said. “If we charge tax, it will affect most to the poor people,” he said, adding that eliminating cor­ruption and collecting more tax from private firms would make up the revenue expected from the now canceled land tax in next year’s budget.

Cheam Yeap denied that the com­mission had removed the new tax in order to benefit wealthy landowners, who would have been the ones most affected by the charges.

Kang Chandararot, an economist and director of the Cam­bodia Institute of Development Study, said he was disappointed by the decision to abandon the tax, which he described as pro-poor.

“Actually this could have been a very strategic way of taxation,” he said.“This is the desired way of raising revenue instead of, for example, raising the tax on gasoline,” which hurts the poor, he added.

The argument that the salaries of civil servants were too low to afford the tax was not a strong one, Kang Chandararot said, adding that the tax had targeted those owning valuable properties.

“The tax was a really good idea. I don’t think based on the argument of the low salaries it should have been defeated,” he said.

Under the tax, the owner of a $25,000 property would have paid just $12.50 a year if the tax had been implemented.

Opposition lawmaker Son Chhay accused the prime minister of giving in to the wealthy elements in his ruling coalition government. “This is ridiculous: In Cambo­dia we always tax the poor and give to the rich,” Son Chhay said. “The reason for this new decision is that so many senior officials of the ruling parties are large landowners.”