Waiting for economic recovery

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Parliament’s Spring Session opened last week, so let’s talk about what bills Parliament will focus on during their plenary sessions. First on Parliament’s agenda is amendments to the 2017 state budget, because the Government of Mongolia needs to amend its budget by increasing seven taxes and fees to be eligible to enroll in an extended fund facility (EFF) program from the International Monetary Fund (IMF).

Cabinet approved a final draft of amendments put forward by the Ministry of Finance, and Parliament is reviewing it now. J.Erdenebat’s Cabinet has been accused of failing to fulfill a promise made by the Mongolian People’s Party (MPP) in its parliamentary election campaigns.

The MPP promised its constituents that no taxes would be increased if they won the elections. During Parliament’s initial review of the amendments, there were several MPP legislators who said they were against the tax increases, but that they could not vote against the party. The majority of the MPP caucus in Parliament believes that approving amendments as soon as possible is the right move.

In Speaker M.Enkhbold’s spring session opening speech, he underlined that the EFF will help Mongolia carry out reforms that will improve management and auditing in the financial sector. The overall message from the MPP Chairman and Speaker of Parliament was that the EFF will enable overcoming the nation’s economic challenges quickly, stabilize the economy, create a healthy banking and financial system, improve the business environment, attract investment, and improve people’s lives. So, it seems that there are no barriers for Parliament in ratifying the amendments.

TAX INCREASES

If there are no changes required by Parliament to Cabinet’s amendments, a tax on interest from all savings accounts will be applied; taxes on gasoline, diesel fuel, alcoholic beverages, cigarettes, social insurance fees, and vehicles will increase; the retirement age will be raised; and personal income will be divided into brackets for taxation.

Personal income tax for employees receiving a monthly salary of up to 1.5 million MNT will stay at its current rate of 10 percent. People who earn 1.5 million MNT to 2.5 million MNT a month will pay 15 percent in income taxes, and people who collect a monthly salary of 2.5 to 3.5 million MNT will pay a 20 percent tax on income.

CONSTITUTIONAL AMENDMENTS

Amendments to the Constitution are another crucial issue this Spring. Many people, including former legislators and current legal specialists, are talking about drafting constitutional amendments, but it is not clear if Parliament will be able to review constitutional amendments during this session. After the public has weighed in on whether or not we should be making constitutional amendments, the future of the Constitution will become more clear.

Prime Minister J.Erdenebat set up a task force led by Head of the National Academy of Gover
nance’s Legal Department Ch.Enkhbaatar, and made up of legal scholars, specialists, experienced lawyers, former legislators, and members of the public. The task force has been instructed to study making amendments to the Constitution and to present recommendations based on their findings. Parliament also formed a task force to study constitutional amendments. Parliament’s task force is being led by MP D.Lundeejantsan.

These task forces are collaborating with the National Statistics Office (NSO) to listen to the public’s opinions on constitutional amendments. The NSO will randomly select over 1,500 people from districts, provinces, and soums across Mongolia to participate in surveys.

The survey participants will be asked to answer questions concerning constitu
tional amendments. The survey will be written by the task forces. Every Parliament talks about making constitutional amendments, but changes have been not carried out. The current Parliament may have a better opportunity to make changes, as the MPP has captured 65 out of Parliament’s 76 seats.

FOREIGN BANKS

In his April 5 session opening speech, Speaker M.Enkhbold also told MPs that Parliament needs to approve a bill on investment banking that could help increase foreign investment, bring Mongolia’s financial market up to international standards, promote fair competition, and help maintain the stable, smooth, secure, and efficient operations of the national payment system.

A group of MPs submitted the bill on investment banking to Parliament on December 28 of last year. The authors of the bill believe that they have outlined solutions for improving the legal environment for pursuing foreign direct investment, enhancing the transparency of the banking and financial system, and improving the legal and regulatory environment for opening foreign bank branches.

Under the bill, foreign bank branches would only engage in investing in the Mongolian market by issuing loans for the implementation of megaprojects. Consumers would not be able to use foreign bank branches for retail banking services.

CASINOS

The previous Parliament talked about drafting a bill on casinos to generate state revenue. Even though the bill was not voted on, the current Cabinet and Parliament have not ignored the proposal of their predecessors, and seem to have the same interest in developing the idea. The original authors of the bill believed that opening a casino could generate revenue of 130 billion MNT for the state, and that it could bring one million tourists to Mongolia each year.

The bill was drafted to include a ten-year license for carrying out gambling operations, which would cost 35 billion MNT, and specified legal parameters for operations, such as only serving foreigners and setting an age limit for gambling. Under the bill, foreign citizens over the age of 18 would be eligible to gamble.

2 COMMENTS

  1. Casinos ! Again! Such State sponsored gambling is not a good idea at all. It attracts all the wrong people, encourages the concept of getting some thing for nothing, and will only create a local growth market in gambling addicts. Although a strong point of view , I would classify the promotion of the potential income generated from casinos as the same as promoting living off the earnings of prostitutes and drug dealers. There is no honour at all in this idea.

  2. Kill the Casino proposal, please. It’s a massive disaster waiting to happen. As if we didn’t already have enough social problems!

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