New Cambodian leader suspends tax changes following message from Hun Sen

After public outrage and seemingly under the influence of his father, the new Prime Minister Hun Manet canceled the government's plan to introduce new taxes and increase existing ones this week. The announcement on Tuesday followed the release of a voice message that former leader Hun Sen sent to government ministers regarding the widespread criticism of the tax proposals.

“Regarding the issue of taxes, please take a look at this,” said Hun Sen in a voice message that was published on Facebook earlier this week. “Why is this blowing up? We haven’t taken any action yet, but this speech is causing outrage.”

Hun Sen, 71, resigned in August after leading the country since 1985.

The voice message indicates that Hun Sen continues to control the government behind the scenes and remains a powerful political force, said Seng Sary, a Cambodian political analyst who has sought asylum in Australia.

Cambodia is trying to recover from the economic damage caused by the COVID-19 pandemic, which has led to inflation, a decline in trade, and an increase in job losses in the important textile sector.

As a result of the decline, the government's General Tax Administration reported that revenues for the first eight months of 2023 were 21% lower than planned in the annual budget.

“We need to keep an eye on the time,” noted Hun Sen in a voice message, mentioning that the issue of taxes arose when Hun Manet had just taken office and neighboring Thailand offered measures for debt relief and other ways to assist people in their struggle with economic difficulties.

“There are some issues; we need to keep an eye on the time,” he said in a message to the ministers. “If we don’t keep track of time, we might do something wrong. Please help us lead the government.”

On Tuesday, Hun Manet addressed 20,000 workers in Phnom Penh, stating that the government will not introduce new taxes or raise existing ones.

“We didn’t do that and we’re not going to do it,” he said about the tax decision. “So be clear on that.”

He noted that the government is currently not taxing certain areas, such as rural areas, agricultural materials and products, real estate valued at less than 100 million rials (25,000 USD), and inheritance.

The details of future tax policies will be published in November after the annual Forum of the government and private sector in Phnom Penh, he said.

Current tax payment procedures make it easier for corrupt tax officials to engage in corruption and oppress taxpayers, said Seng Sari.

"Hun Manet must announce a reform of effective tax collection methods and reduce corruption in the tax sphere so that people can have a positive opinion of the Hun Manet government," he said.