PHNOM PENH – The government plans to apply a special tax on products known to damage health, including alcohol, cigarettes and sugary goods.

A senior economic official said the new rate was still to be determined.  

Ministry of Economy and Finance Secretary of State Phan Phalla presented plans at a public forum on February 10 on macroeconomic management and the 2025 National Budget Law.

“We are ready to raise a special tax on goods that affect health. The funds collected by the state from these goods will be used to offset public health care,” Phalla said. 

The Economic Ministry, along with the General Department of Taxation, would hold a public forum for stakeholders, particularly the private sector that produces and sells these goods, before details of the tax were announced.

The plan is part of Cambodia’s commitment to increase the tax burden to 75 percent of the market price, following World Health Organization recommendations. However, the ministry has yet to establish a timeline for the tax rise. 

Seng Cheasith, director of the Department of Legislation, Tax Policy and International Tax Cooperation of the General Department of Taxation, said the special tax could affect producers, traders, consumers and national policy.

“A comprehensive discussion and strategy are needed to determine a rate for this tax,” Cheasith said. 

Mom Kong, executive director of the Cambodian Health Movement, noted that strengthening tobacco tax collection in the past by increasing taxes on tobacco products is a win-win strategy for everyone involved, as it generates additional revenue for the state and lowers public health service costs. 

Furthermore, the number of people who become ill or die from tobacco-related issues will also decline.

“We believe that no product can generate as much profit as tobacco products,” Kong said.

“While raising taxes on some products may affect people's livelihoods, a tobacco tax implemented by the state will have no negative impact and may lessen people's suffering. 

“Increasing taxes on tobacco products means the state will not incur any losses."

Kong also cited a survey in 2022, indicating that 94 percent of Cambodians support raising taxes on tobacco.

Cambodia’s tax rate on tobacco products is one of the lowest, standing at just 25 percent for domestic cigarettes and 31 percent for imported ones. Thailand has a tax rate of up to 70 percent, Singapore has 67.5 percent, Myanmar's rate ranges from 50 to 60 percent, and Vietnam's is about 35 percent.

In June 2024, the WHO representative in Cambodia, Ada Moadsiri, urged the government to increase the special tax on cigarettes, as current taxes were not discouraging smoking sufficiently.

The UN report found that 15,000 Cambodians die each year from diseases caused by tobacco use, including lung cancer.  Tobacco use results in losses of $649 million annually, equivalent to 3 percent of Cambodia's gross domestic product. 

Of this amount, $584 million is attributed to lost economic productivity due to premature death, decreased productivity from smoking, and absenteeism from work.

According to the UN Study on Investment in Tobacco Control 2019, if Cambodia raises tobacco product taxes to 75 percent, it will generate an additional tax revenue of $235 million over the next five years. 

This revenue is expected to increase to $933 million over the next 15 years. In addition to raising taxes on tobacco, this measure will help reduce the rates of death, disease, and disability caused by tobacco use.