Tobacco and alcohol taxes to gradually increase from 2018 to 2020

Tobacco and alcohol taxes are to increase by 10% in 2018, 5% in 2019 and 5% in 2020. This is one of eight fiscal policy actions to be undertaken by the Government of Mongolia (GoM) under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) programme the GoM and IMF have negotiated from 1-19 February as the working group level agreement.

“WHO has consistently been advocating for the tax increase on alcohol and tobacco as a policy measure that has dual benefits: increasing state revenues and protecting human health as an increase in price of cigarettes and tobacco is proven to be very effective in lowering the consumption of these products by the public,” said Dr Soe Nyunt U, WHO Representative in Mongolia. WHO has facilitated two consultations in March 2016 and January 2017 on calculating the return on revenues from an increase of tobacco and alcohol tax.

Under the EFF programme, Mongolia will receive a total of around USD 5.5 billion for 3 years to restore economic stability and debt sustainability: USD 440 million in grants from IMF and up to USD 3 billion from the Asian Development Bank, World Bank and governments of Japan and Korea. In addition, the currency swap agreement with the Bank of China is expected to be extended by RMB 15 billion for 3 years. The agreement will be discussed at next month’s IMF Board of Directors meeting.