PM Says No Tax on Farmers, Mulls Irrigation Funding

Cambodia’s farmers remain too poor to pay income and property taxes, Prime Minister Hun Sen said yesterday, responding to calls from international organizations for the government to step up its tax collection efforts.

“Over the last few days, I’ve heard about an IMF appeal for the government to increase taxes since the tax revenues in our country are lower than in neighboring countries,” said Mr Hun Sen, speaking at a graduation ceremony at the National Institute of Education in Phnom Penh.

“It is true the we have yet to collect property taxes or other taxes from farmers and I have told the IMF, the World Bank and the Asian Development Bank that Cambodian farmers can’t be asked for tax yet and must be helped.”

On Sunday, the International Monetary Fund’s Asia and Pacific Department director, Anoop Singh, said at a press conference that “important steps are needed in Cambodia’s case to raise the tax ratio.” Mr Singh did not mention farmers, but estimated that Cambodia’s ratio of tax revenue to GDP lagged 5 to 7 percent behind most other countries in similar states of development.

In July, the UN Economic and Social Commission for Asia and the Pacific released a report claiming the government would need to increase its tax collection ability in order to maintain robust spending. According to the ESCAP report, Cambodian tax revenues amount to only 11 percent of GDP, compared to an average of 20 percent in developing countries worldwide.

According to an ADB report released in July, public debt in Cambodia rose from 16 percent of GDP in 2008 to 22 percent of GDP last year.

“One of the constant recommendations from the international donor community is to broaden the tax base to include more people under the system,” Eric Vanderbruggen, a government and World Bank tax consultant, said on Monday.

Officials from the General Department of Taxation could not be reached for comment yesterday.

Mr Hun Sen said in his speech that the government is trying to determine how to pay for irrigation systems without collecting taxes or service fees from farmers.

“When we think about the economy in general, we must invest in improving our agricultural sector,” he said.

Ministry of Water Resources Secretary of State Phan Sareth said yesterday that lack of government funding has made expanding the irrigation network that currently covers roughly 60 percent of Cambodia’s farmland increasingly difficult.

“Previously, we’ve received funds from foreigners to improve irrigation, but this is not enough to extend our system,” said Mr Sareth.

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