Fewer imports and ongoing smuggling have slashed projected customs revenues by 25 percent since the July polls, customs officials said this week.
Some government officials expressed alarm over the impact the shortfall would have on salary payments and other budget requirements.
“It’s very serious,” Customs Director In Saroeun said Tuesday. “It’s not just me and Customs officials who are worried about the decline of tax revenues. Other government officials are worried also.”
During the month of September, Customs collected only 34 billion riel ($8.9 million), 24 percent below the monthly target of 45 billion riel ($11.8 million) set by the Finance Ministry, In Saroeun said. In August, 33 billion riel was collected, he said, down from July’s 40 billion riel.
The direct result of this most recent revenue shortfall has been the tardy payment of some civil servant salaries since July, Council of Ministers spokesman Khieu Thavika said. “The government will pay but it has been slow.”
Government economic adviser Bit Seanglim said the situation had not reached crisis level. He said the government has options to make up for the gap, including raising taxes. “For the immediate future, we don’t have a critical situation with banks run over and coffers empty,” he said.
The government hopes that foreign aid withdrawn last year following factional fighting will return soon after a coalition government is formed, he said.
Customs officials also hope the government formation will give businesses confidence to begin importing goods again. Import duties account for more than half of the government’s revenue, and gasoline and cigarettes are consistently two major money earners, according to Finance Ministry statistics.
The main reason for the revenue shortfall, In Saroeun said, was the substantial reduction in imports—especially gold, gasoline and cigarettes—since the election in July.
Smuggling across Cambodia’s border with Thailand continues to be a factor. Kim Nguon, deputy chief of ports, said the government is losing up to 10 percent of potential revenue each month through smuggling.
Senior government officials and petroleum industry sources have said that gasoline smuggling through Pailin has caused a serious dent in revenues. The two prime ministers had announced a crackdown in July, with demands for more border inspections.
Kim Nguon and In Saroeun said it has been hard to clamp down on the trade mainly because customs officials are afraid to stop the smugglers who often are former soldiers and police and are armed.
“We need time to ban smugglers,” Kim Nguon said. “We can’t crack down immediately.”
(Additional reporting by Debra Boyce)