Tax Revenue Drops After Polls Wakd of pOlls Wake of Polls

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The government hopes that foreign aid withdrawn last year following factional fighting will return soon after a coalition government is formed, he said.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) 



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