Tax exemptions on vehicle imports for parliamentarians and other officials has cost the government millions of dollars and will have to stop, Prime Minister Hun Sen said Sunday.
Since the incentive was introduced in 1993, the exemption has cost the government $50 million, Hun Sen said after taking a trip across the Tonle Sap river to see the developments made in the area opposite the Royal Palace.
If parliamentarians were no longer allowed duty exemptions on their utility vehicles, trucks and cars, the government could earn more than enough—about $5 million—to finish the park and promenade being built opposite the palace, Hun Sen said.
“We will have enough money to develop this area for the next generation,” he said.
Phnom Penh Governor Chea Sophara wants to develop the area by improving the dike, building seats along the bank and a massive exhibition center, all of which could cost $9 million.
“I appeal to the National Assembly [and Senate] members: Don’t ask for a tax exemption,” Hun Sen said. “It is easy to earn money from the tax, and the government never has any money.”
The government has been looking for ways to increase its revenue through taxes, while struggling with the tariff reductions required by the Asean Free Trade Agreement. Under the agreement, the government will have to eliminate all trade barriers to Asean countries by 2015. The government, under advisement from the World Bank, is also considering the elimination of tax incentives for businesses.
Meanwhile, businessmen still complain that high import taxes are costing them money because such tariffs encourage smuggling. Taxes on new utility vehicles such as Toyota Land Cruisers are 120 percent.
The National Assembly and 61-member Senate will have those percentage rates to look forward now if they want to import a vehicle, Hun Sen said. That way, the government will have more money to improve schools, roads and bridges for the poor, he said.