Phnom Penh tax revenue dropped 36 pct in 2009

PHNOM PENH, Feb. 18, 2010 (Xinhua) -- Phnom Penh municipality's tax revenues in 2009 plummeted 36 percent to 37.6 million U.S. dollars, local media reported on Thursday, citing the statistics released by the municipality.

The Cambodia Daily quoted economists as saying the decrease shows the worst effects of the economic recession last year, particularly in the real estate sector where sales were stagnated, and other major sectors such as tourism and garments also played a role in the slump.

Om Chan, director of the municipal tax department, blamed the world economic crisis for reducing taxable revenues in construction and manufacturing, adding "major building construction shut down and did not work," according to a presentation he gave at City Hall on Monday.

Chan Sophal, president of the Cambodian Economic Association, was quoted as saying that revenue loss is not surprising given the bursting of the real estate bubble after years of skyrocketing prices and a high number of sales.

Neou Seiha, a senior researcher for the Economic Institute of Cambodia, said the decline in tax revenue is so much steeper than the GDP decline because sales taxes, profit taxes and other taxes mainly affect the formal sectors of the economy, which were most battered by the crisis.

The main sector in Cambodia's economy to grow last year was agriculture, which was of little help to tax collectors in the country's urban center, he said.

"The tax is very related to the economic activity. They can collect tax from active economic operators if they have economic activity. If they don't have economic activity they can't collect, " he was quoted by the daily.