The two prime ministers have ordered a clampdown on smuggling as the government continues to lose revenue from customs taxes in the border regions.
Illegal imports have had an adverse effect on customs revenue since the beginning of the year, First Prime Minister Ung Huot and Second Prime Minister Hun Sen declared last week in an order aimed at curbing illegal imports. Overall income was less than planned for the first five months of 1998, the prime ministers said, blaming the shortfall on tax evasion in seven border regions, including Pailin and Banteay Meanchey.
Goods such as batteries, television sets and electrical appliances are being brought into the country undeclared, as are illegal imports like right-hand drive cars, the July 1 order said.
“Tax lost from oil imports is particularly great,” the two prime ministers said, “as it is protected at a high level by a small group of men.”
The order appeals to local authorities, police and military to cooperate with customs officers to stamp out smuggling, and demands more border post inspections to stop the tax collectors themselves from colluding with the smugglers. Ung Huot and Hun Sen made it clear that the country is facing a “budget crisis” and is relying on this income for salaries and other budget requirements.
Customs Director Im Saroeun said Wednesday that tax revenue had increased slightly in June but added that some areas were still losing out to smugglers who failed to pay proper import duty.
“Revenue in Poipet has decreased [from last month],” he said. “That was caused by illegal imports guarded by heavily armed men.”
But Im Saroeun said he believes concerted action by customs officials has already had some impact on collection.
“We have seized many containers of illegally imported goods, forcing businessmen to come and declare their goods who might otherwise plan to escape paying the tax,” the customs chief said.
Im Saroeun thought income may slow this month with fewer people importing goods before the election, a thought echoed by Te Duong Tara, economic adviser to the Council of Ministers.
“Businessmen don’t want to keep a big stock during the [election] campaign as they’re not sure about the political situation,” he said. “Imports are always down when the supply is down.”
The government relies on customs duties as one of its major sources of revenue, and has been criticized by international financial institutions for failing to broaden its tax base.
(Additional reporting by Touch Rotha)