Thailand
Cambodia: Fiscal revenue growth revised down
The Cambodian government has revised its target for year-on-year fiscal revenue growth to 0.3 percent of gross domestic product (GDP), down from the planned 0.5 percent increases as outlined in the original Revenue Mobilisation Strategy 2019-2023.
The revised figure means the government’s fiscal revenue target will be 18 percent of GDP for the 2021 tax year.
Depending on various forecasts, national GDP is expected to be between approximately $27 billion to $30 billion next year, representing expected total national revenue at around $4.8 billion to $5.4 billion.
According to Cambodia’s $7.62 billion 2021 draft budget approved on Friday, the government plans to collect around $5.275 billion in national revenue, borrowing around $1.5 billion from development partners to cover the shortfall.
“The government has decided to revise down its annual increases for fiscal revenue growth over the coming years due to the economic effect of the COVID-19 pandemic in Cambodia and the region,” Ministry of Economy and Finance spokesperson Meas Soksensan said.
“Systematically the new 0.3 percent growth figure will cover the full 2019-2022 period,” he added.
Last year the government set its fiscal revenue target at around 4.56 billion dollars, however, it was able to exceed this target and earn $6.04 billion, representing more than 22 percent of Cambodia’s 2019 national GDP of approximately $27 billion.
The increase was attributed to a much better than expected annual revenue from the General Department of Taxation, which reportedly collected $2.819 billion in revenue last year, up 28 percent compared with 2018’s $2.197 billion.
According to government figures so far, total fiscal revenue collected was recorded at $2.956 billion for the first half of 2020, representing a 0.7 percent decrease compared with the same period last year.
The government’s strategy of increasing tax revenue collection had been successful under the previous Revenue Mobilisation Strategy 2014-2018, with the percentage revenue of GDP growing at an average rate of 1.4 percent, more than double compared with the target of 0.5 percent.
The new Revenue Mobilisation Strategy 2019-2023 launched in June last year and was designed as a roadmap for inter-related ministries to follow in order to make revenue collection more efficient and effective, with integrity and credibility.
The strategy aims for sustainable economic growth and optimum revenue levels, ensuring justice for taxpayers. It also aims to ensure social justice by easing the tax burden for the poor, a commitment to provide welfare and to ensure environmental protection.
According to the International Monetary Fund, developing countries should have a tax-to-GDP ratio of at least 15 percent to ensure they have the money necessary to invest in the future and achieve sustainable economic growth, while developed countries generally have a far higher ratio.
Source: https://www.khmertimeskh.com/50777271/fiscal-revenue-growth-revised-down/