Oil import tax under fire from opposition

via CAAI

Wednesday, 29 December 2010 15:00 Chun Sophal

CAMBODIA’S tax on oil imports came under fire from opposition members as too high yesterday, but government officials maintain the duties are a necessary source of income for the national budget.

The Kingdom will have difficulty competing with its neighbours if it does not cancel or reduce rates on the oil import tax, said Sam Rainsy Party senator Yim Sovann.

High import taxes have caused oil prices to increase on domestic markets compared to countries like Thailand and Vietnam, which encourages illegal smuggling, he said.

“The cancellation of this import tax will result in a loss for the national budget,” he said. “But we will gain benefits for our economy and people because we can produce more finished products at low prices for exports to international markets.”

The government collects 1,200 riel (US$0.30) per litre of import oil, according to Yim Sovann. Higher oil prices increased the costs for Cambodia’s goods, making it challenging to compete with products from other countries.

“We cannot compete with products from other countries as long as we cannot reduce the difficulties stemming from [high] oil and electricity prices,” he said.

However, government officials said the revenue was crucial for the national budget.

Kong Vibol, secretary of state at the Ministry of Economy and Finance, told the National Assembly yesterday that oil import revenue increased to US$250 million this year, a 19 percent increase on 2009.

“We will lose about $250 million if we cancel the full oil import tax as requested by Senators from the opposition party,” he said.