Government Revenue and Spending Up in 2013

Cambodia’s state coffers continued to expand last year, with government revenue increasing by eight percent over the year before as a result of higher tax collection, while expenditures jumped 32 percent to $3.1 billion, according to a statement from the Ministry of Finance.

Total domestic revenue in 2013 was $2.07 billion, eight percent higher than the $1.9 billion in revenue in 2012, as the country’s key industries offset dents in the economy caused by political uncertainty and natural disasters, the statement says.

“In December 2013, the economy performed as normal due to macroeconomic stability despite the flooding and the post-election political situation. The increase [in revenue] was in the garment, construction, tourism and investment [sectors].”

In December, revenue from customs tax rose 19.2 percent compared to December 2012. The growth followed efforts by the customs and excise department, beginning in November, to more stringently collect import duties.

Jayant Menon, lead economist at the Asia Development Bank’s regional economic integration office, said although the Finance Ministry’s data suggests that efforts to raise government revenue are working, the tax base still needs to be expanded.

“There is a need to broaden the tax base…to ensure the increase is sustainable, and move sources of revenue away from specific taxes (eg. customs and trade related) to general ones (consumption or expenditure based),” he said in an email.

“The greater challenge for now remains tax collection, rather than tax instruments or types of taxes,” he added.

Independent economist Srey Chanty said government spending on key areas such as social services—including education and vocational training—remains low, despite the government’s commitment to building a more skilled labor force.

“The expenditure on social services to gross domestic product is still relatively low,” he said.

In 2013, government spending on social services was just 4.4 percent of GDP, according to Ministry of Finance estimates.

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