Each
year, foreign donors provide assistance and development aid to Cambodia
that is equivalent to more than half of the country’s annual budget.
The United States alone provided about $76 million for economic, health,
education, environmental, and democratic development assistance in
Cambodia in 2012. While noting the critical role played by foreign
countries, a recent reader of my column asked, “How can Cambodia become
less dependent on foreign assistance?”
The simple answer is
that the Cambodian government needs to generate more revenue. One way
to accomplish that is through improvements to the tax collection
system. Although most people do not like paying taxes, an efficient tax
collection system is indispensible to the functioning of any modern
government. Taxes pay for nearly every service that a government
provides, including building roads, providing an education to children,
and ensuring the safety of citizens. As former U.S. President James
Madison said, “The power of taxing people and their property is
essential to the very existence of government.”
While
the United States remains committed to helping Cambodia, I can assure
you that our long-term goal is to help the country “graduate” from
foreign assistance, transforming from a recipient of aid to a provider
of assistance. As a leader in the health arena, Cambodia deserves
tremendous credit for significantly improving the health of its people.
Recognizing this success, the U.S. government is beginning to shift its
assistance from service delivery to technical assistance. As Cambodia
strives to become a middle class society, it must be prepared to assume
greater financial responsibility and face the likelihood of no longer
depending on foreign assistance.
I am happy to note that
Cambodia has already started this transition by contributing troops to a
number of international peacekeeping missions, including the UN
missions in Lebanon, Sudan, South Sudan, the Central African Republic,
and Chad. Cambodians on these missions are performing critical work on
projects related to demining, road and bridge construction, and medical
treatment for civilians.
For Cambodia to continue making progress
in transitioning away from a dependence on foreign assistance, however,
the country must boost its government revenue. To support this effort,
the U.S. Treasury Department has been working closely with Cambodia’s
General Department of Taxation to help it develop a four-year strategic
plan for improving internal management and accountability in collecting
government revenue. U.S. technical assistance is also helping
Cambodia’s taxation department to audit companies more accurately,
increase collection of taxes in arrears, publish information for
taxpayers, better manage human resources, improve strategic and
operational planning, and increase employee awareness of organizational
ethics and integrity.
As a result of these efforts and the
General Department of Taxation’s strong leadership, Cambodia has made
substantial progress over the past year. In 2012, the department
substantially increased internal tax collection compared with 2011.
This remarkable achievement bodes well for Cambodia’s ability to
graduate from a reliance on foreign assistance to a more independent,
sustainable position.
It is important to remember, however,
that the need for increased government revenue does not necessarily
justify increasing rates or creating new taxes. High taxes can
discourage investment, fuel black markets, lead to capital flight, and
ultimately mean less revenue for the government. These factors
demonstrate the importance of getting the right balance in tax rates and
how focusing on improving revenue collection under current tax schemes
can be preferable to creating new taxes or increasing rates.
I
understand, of course, that taxes reduce the amount of money available
for basic necessities like food, education, and shelter. We work hard
to put food on the table, save for our children’s education, and
provide for our families. Tax revenue, however, allows the government
to pay teachers’ salaries, build and maintain infrastructure, and keep
us safe. Government revenue paves the way toward self-sufficiency. As
former U.S. President Franklin Roosevelt once said, “Taxes…are the dues
that we pay for the privileges of membership in an organized society.”
As
always, thank you for the feedback to my “Ask the Ambassador” column.
One of the best ways for me to learn more about the issues facing
Cambodia is by listening to your interesting and thoughtful questions. I
hope to continue to hear from you at AskAMBToddPP@state.gov.
William E. Todd is U.S. Ambassador to the Kingdom of Cambodia
3 comments:
No word " CORRUPTION " was mentioned ? is Todd
afraid of Hun Sen Volunteer Youth ?
China #1 for Cambodia.
I have to agree with the U.S. Ambassador William E. Todd. Taxation is very important for the government services. As a good citizen we should pay taxes and commit no crime. However, I always have problem on how the government spends the money that generate from these taxes. The bigger the government, the more taxes we have to pay and most of the governments are often not doing a good job when they are trying to parenting the society. Most of the policies the governments made are base on their political and their individual interests, not necessary benefit the country as whole. I believe in a smaller government and a more affective government and at the same time I also believe in liberty in which government should not impose any rule of laws that would taking a way individual freedom. Cambodia is far from that of the government.
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