## Advancing Inclusive Growth in Cambodia

_IMF Working Papers, September 6, 2019_

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**Canonical URL:** [Advancing Inclusive Growth in Cambodia](https://www.imf.org/en/publications/wp/issues/2019/09/06/advancing-inclusive-growth-in-cambodia-48563)

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## Bibliographic details
- Authors: Niels-Jakob H Hansen, Albe Gjonbalaj
- Published: September 6, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513510552.001

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### Summary and research approach
- Evaluates the impact of fiscal reforms on growth and inequality in Cambodia using a calibrated general equilibrium model with heterogeneous agents (Peralta-Alva et al., 2018).
- Uses the model to evaluate the growth and inequality impact of reforms that increase infrastructure spending by raising:
  - (i) VAT,
  - (ii) property tax, or
  - (iii) personal income tax.

### Key findings
- Over the last two decades:
  - Cambodia’s consumption inequality and poverty have declined.
  - Income inequality is higher, and large gaps remain between urban and rural residents.
- Domestic revenue mobilization has improved substantially, but collection of tax revenue is biased towards non-progressive sources.
- Reform outcomes from the model:
  - Using property taxes delivers the largest increase in GDP and reduction in inequality.
  - Reaping the gains from property taxation will however require additional investments in tax administration.

### Policy implications and recommendations
- To maximize growth and equity gains from increased infrastructure spending, prioritize property taxation as the revenue source.
- Complement property tax reforms with investments in tax administration to realize projected GDP gains and inequality reductions.
- Consider distributional effects when choosing between VAT, property tax, and personal income tax as revenue instruments for infrastructure financing.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2019/09/06/advancing-inclusive-growth-in-cambodia-48563_