By the post-midnight conclusion of Friday’s parliamentary session, Parliament approved the final draft of amendments to the 2017 state budget and bills attached to it, including six laws and three resolutions required to enrollment in an extended fund facility program from the International Monetary Fund.
The amendments were approved by Parliament despite opposition from the Democratic Party and entrepreneurs, who criticized a number of the tax increases outlined in the proposed amendments put forward by Cabinet.
According to the amendments, revenue is expected to be 23.2 percent of GDP at six trillion MNT, expenditure is expected to be 33.6 percent of GDP at 8.7 trillion MNT, and the deficit is expected to be 10.4 percent of GDP at 2.7 trillion MNT.
Under the amendments to the 2017 state budget, the following changes will be made:
1. Revenue from state property privatization will be spent on reducing the budget deficit.
2. Parliament will review construction project concession agreements during its review of the state budget.
3. Effective May 1, a 10 percent tax on interest for all savings accounts will be applied.
4. The five percent tariff on imported cigarettes will be raised by 30 percent.
5. Taxes on gasoline and diesel fuel, which were lowered in October 2016 and in January 2017, will be raised in July and October.
6. Excise taxes on alcoholic beverages and cigarettes will be raised by 20 percent from 2018 to 2020.
7. Personal income taxes for individuals earning up to 1.5 million MNT a month will not increase. A 10 percent income tax will be in place for people who earn 1.5 million MNT a month, and will be set at 15 to 25 percent for higher income earners. An individual who earns two million MNT a month will pay a 10 percent income tax on 1.5 million MNT earned and will pay a 15 percent tax on the remaining 500,000 MNT earned. People earning up to 2.5 million MNT a month will pay a 15 percent tax on income exceeding 1.5 million MNT, people receiving a monthly salary of 2.5 to 3.5 million MNT will pay a 20 percent tax on income exceeding 1.5 million MNT, and people who earn 3.5 million MNT or more will pay 25 percent on income exceeding 1.5 million MNT.
8. Beginning in 2018, the retirement age will be raised by six months each year, so that the retirement age for men will be 65 by 2028 and the retirement age for women will be 65 by 2038.
9. Vehicle taxes will be raised by three to 250 percent, depending on a vehicle’s age and engine capacity. The tax on vehicles with an engine capacity over 4501 cc will be increased by 40 to 250 percent.
10. Children’s Money will be distributed only to target groups through the issue of food coupons. A survey will be conducted to determine which children fall into targeted groups. It is estimated over 500,000 children will be eligible to receive the monthly state welfare.