Assembly to start debate on draft budget, finance laws

(Posted by CAAI News Media)

Monday, 30 November 2009 15:02 Tep Nimol and James O’toole

THE National Assembly is scheduled to begin debate today on the 2010 Draft Budget Law and the Draft Law on Finance for 2010 Management, which includes provisions for new taxes on property and automobiles.

Under the proposed laws, a tax of 0.1 percent would be levied on properties that are valued at over 100,000 riels (US$24,000) by a Property Valuation Commission to be established by the Ministry of Economy and Finance. Agricultural land, government property and religious, diplomatic and humanitarian organisations would be exempted from the tax.

Automobiles would be subject to taxes varying by year of production and horsepower, with vehicles of 24 horsepower and above subject to a tax of 2 million riels (US$480).

Cambodian People’s Party lawmaker Cheam Yeap said the proposed taxes are necessary as the government faces a decline in revenues, investment and foreign aid owing to the global downturn.

Sam Rainsy Party spokesman Yim Sovann, however, contended that the new taxes were necessary simply because the government is losing much of its revenue to corruption.

Because Cambodia does not have a history of collecting property taxes, Cheam Yeap said he expected the revenues generated in the first year of implementation to be modest.

“I hope that in the first year of real estate tax collection, we will get about $7 million, because many people may not understand the tax and will therefore fail to pay it,” he said.

In an analysis of the draft budget law issued Saturday, the civil society coalition NGO Forum applauded the introduction of vehicle and property taxes as effective means of boosting government revenues.

The property tax, it said, “is especially expected to promote productive investment by discouraging the holding of unused land for speculation”.

NGO Forum also praised the draft law for following through on the government’s commitment to decentralisation, noting that the 2010 draft budget law allocates $62 million to provincial, district, commune and village authorities, compared with the $42 million allocated in the 2009 budget.

The coalition expressed worry, however, about the relatively small budgetary increases for offices considered crucial to poverty alleviation, including the Ministries of Agriculture and Education.

Increased allotments for the Ministries of Health, Justice, and Rural Development were lauded, and though NGO Forum emphasised the need for monitoring project-implementation, it did not discount the importance of the planning stages.

“The National Budget Law is [the] government’s most important instrument to achieve economic growth and poverty reduction,” the analysis said.

ADDITIONAL REPORTING BY JACOB GOLD