Logo of Phnom Penh Post newspaper Phnom Penh Post - PM seeks tax break for low earners

PM seeks tax break for low earners

Prime Minister Hun Sen speaks at an event yesterday at the Peace Palace in Phnom Penh, where he called for an increase to the minimum income tax threshold.
Prime Minister Hun Sen speaks at an event yesterday at the Peace Palace in Phnom Penh, where he called for an increase to the minimum income tax threshold. Facebook

PM seeks tax break for low earners

Prime Minister Hun Sen yesterday announced that he would ask parliament to raise the threshold on taxable income to relieve taxpayers beginning at the start of next year, another in a string of populist moves before next year’s elections.

Speaking at the launch ceremony of a vocational training policy, the premier said his government would ask the National Assembly to approve an increase of the tax threshold to $300 from the current $250 when the national budget is up for a vote.

“This benefit is not only for the government officials, armed forces, but the workers in all sectors. It means that from $300 or less they will not have to pay the tax.”

“But the important thing is that the National Assembly will support this because it is in the budget and we will implement it from January 2018,” he said.

A similar move was made last year when the threshold was increased from $200, up from $125 in 2014. Civil servant wages are also expected to go up to $250 in 2018 – a 2013 CNRP election pledge that was adopted by the premier in 2014, despite initial apprehensions.

The move is one of a handful of recent populist announcements that will benefit the pocketbooks of large blocs of voters. On Monday, Hun Sen promised a $200 baby bonus for civil servants, armed forces and police officials, $400 for twins and $600 for triplets – with a similar pledge made to garment workers last month, though at a lower rate per child.

The premier has made a string of promises to garment workers, whom he has met with on a weekly basis for the past two months. These include free bus rides in Phnom Penh, maternity pay equal to 120 percent of their salary, free health care and a minimum wage of at least $160 – which was last week fixed at $170, with Hun Sen’s customary $5 bump included.

Nup Sothun Vichet, a spokesman for the Ministry of Economy and Finance, said he didn’t yet know how much the premier’s largesse will cost but said the Council of Ministers will hold a meeting next week to discuss details.

National Assembly spokesman Leng Peng Long said that he was unaware of the budget proposal but the appropriations bill would be voted on in late October or early November.

Cambodia National Rescue Party lawmaker Ou Chanrath welcomed the government’s plan but urged upping the threshold to 1.5 million riel, or close to $370.

“I think that this is not wrong since the living standards of people whose salary is around 1.2 million riel [$250] is still low, and if they need to pay the tax there is going to be less [savings] for each family,” he said.

Chan Sophal, the director for the Centre for Policy Studies, said the government wouldn’t lose much income to the tax breaks and said the motive for the move was apparent.

“The motive you can understand yourself. It is normal when you are not required to pay taxes, you will be happy,” he said, while also suggesting tax rate increases for the upper echelons of Cambodian society.

Miguel Chanco, lead Asean analyst for the Economist Intelligence Unit, said it was reasonable for a country of Cambodia’s level of economic development to increase such thresholds from year to year. This, he said, could have a small economic impact on the country’s budget deficit, but was also to be expected with elections around the corner.

“The budget deficit will widen on two fronts – we expect the government to offer tax perks (to low-income households in particular) and boost spending, especially in social areas and in public-sector pay, in the near term in view of the upcoming election,” he wrote by email.

MOST VIEWED

  • PM: No more quarantine for vaccinated travellers

    Cambodia is lifting all quarantine requirements for vaccinated inbound travellers entering Cambodia by air, waterway or land border checkpoints effective from November 15. Travellers will be required to take a rapid antigen test on arrival rather than waiting for the results of the lengthier polymerase chain

  • No payment required for travellers taking rapid Covid tests on arrival

    Ministry of Health officials said there would be no payment required for the rapid Covid-19 tests given to travellers who arrive in Cambodia from November 15 onwards after the quarantine requirement is lifted for fully vaccinated people. Health ministry spokeswoman Or Vandine told The Post on

  • General’s gun smuggling ring busted

    The Military Police sent six military officers to court on November 22 to face prosecution for possession of 105 illegal rifles and arms smuggling, while investigators say they are still hunting down additional accomplices. Sao Sokha, deputy commander of the Royal Cambodian Armed Forces and commander of

  • More Cambodians studying in US

    The number of Cambodian students studying at US colleges and universities in 2020-21 increased by 14.3 per cent over the previous year despite the Covid-19 pandemic, according to a recent US government report. The 2021 Open Doors report on International Educational Exchange showed that 848 Cambodian students studied

  • Cambodia, Thailand to discuss border reopening

    Cambodian authorities from provinces along the Cambodia-Thailand border will meet with Thai counterparts to discuss reopening border checkpoints to facilitate travel, transfer of products and cross-border trade between the two countries. Banteay Meanchey provincial deputy governor Ly Sary said on November 22 that the provincial administration

  • Police arrest Canadian with 167kg of drugs

    The Phnom Penh Municipal Court on November 15 placed a Canadian national in pre-trial detention in connection with smuggling and possessing 167kg of illegal drugs. Deputy National Police chief in charge of anti-drug enforcement Mak Chito told The Post on November 15 that the man was arrested