WILL PASTURE TAX
IMPROVE LIVESTOCK HEALTH?
Herders don’t pay any taxes with respect to their livestock or pasture, but they would have paid a tax on livestock before Parliament repealed it in May 2009. Parliament repealed the section regarding the tax on livestock from the Law on Personal Income Taxes for Individuals to “support” herders who lost their livestock due to harsh winter conditions in 2009, but observers believe that Parliament’s decision was a political move to win favor in the 2009 presidential election as herders constitute a large portion of voters in provinces.
Herders would have had to pay an annual tax of 50 MNT per sheep and goat, while camels, horses or cattle warranted 250 MNT each. As Parliament changed the Law on Livestock Tax in 2006 based on location, a herder living in remote areas paid an annual tax of 50 MNT per sheep, while herders around Ulaanbaatar were to pay a tax of 100 MNT per sheep, and other herders would pay 75 MNT in tax.
After amendments to the law, herders who started paying more taxes criticized Parliament’s decision, but all herders were pleased with the 2009 parliamentary decision on tax exemption.
Mongolia’s livestock population was 61.5 million last year, and according to the 2016 report, there were 8.11 million camels, horses and cattle, and 53.42 million sheep and goats.
If herders paid an annual tax of 50 MNT per sheep, the government would have received revenue of 4.6 billion MNT, which means that a revenue of nearly 10 million MNT could have been streamed to each soum.
Former Prime Minister J. Erdenebat put forward a proposal to reinstate the tax on livestock to Parliament in 2015, when he was Minister of Finance, but the majority of MPs disagreed with his proposal because they were worried about losing votes from herders in the 2016 parliamentary elections.
Some observers believe that although lawmakers and the government want to reinstate the tax on livestock, they are afraid of opposition from herders as Parliament and Cabinet supported a number of tax increases, which received heavy criticism from the public, to enroll in the extended fund facility program of the International Monetary Fund.
This year was a great time for Parliament to reinstate the tax on livestock or to create a new pasture tax because they have no worries about votes from herders since there won’t be any elections in the next two years, but instead of focusing on making new laws or pursuing ways to increase revenue and cut spending, legislators have spent their time by fighting each other for power since this year’s presidential election.
Taxes collected from herders usually go to the soum, but heads of soums do not spend money from the tax on livestock to increase income for herders, improve pasture conditions or combat desertification.
If the tax on livestock is reinstated, the government will have to revisit its policy on how to spend it, and if it follows historic precedents, this tax won’t support herders’ development and pasture management.
To support the export of livestock products, the Ministry of Food, Agriculture and Light Industry is searching for ways to improve livestock health.
The government devotes over 10 billion MNT to improve livestock health a year in wages for veterinarians who work on campaigns on livestock health and breeding, and expenditures for vaccines against animal infectious diseases.
Only around 70 MNT is spent per cattle to improve livestock health a year.
If the government asks herders to pay an annual tax of 100 MNT per sheep to spend the tax for improving the nation’s livestock health, almost all herders will agree to pay because they all want to increase their incomes by becoming cost-effective manufacturers of Mongolian livestock and agricultural products that meets international standards for export.