(A) study of increasing local government revenue through immovable property tax policy reform : a case study of Ulaanbaatar city, Mongolia

다국어 초록 (Multilingual Abstract)

Ulaanbaatar city was originally planned for the population of a half million in the 1950s. However, the population of Ulaanbaatar has reached 1.35 million or unofficially 1.5 million, due to the several factors such as the economic growth of Mongolia, environmental impact, migration, poverty and urbanization. That rapid urbanization affected the public service delivery of Ulaanbaatar, especially the accessibility of infrastructure services. Eventually the number of people living in a safe and healthy environment has been constantly declining. About 60% of the urban population live in undeveloped areas or ger settlement areas . The ger settlement areas occupy about 90% of the area in Ulaanbaatar, but it does not provide the basic engineering supplies such as central heating, clean water supply and sewerage. Because of the insufficient infrastructure, the city faces major issues that urgently need to be addressed, such as air pollution, traffic congestion and, soil pollution.

Currently, there are no adequate financial resources in Ulaanbaatar city to solve these issues, so that it is necessary to build and improve the financial capacity of Ulaanbaatar city. This study is the first ever work to solve this issue. Since 2013, Ulaanbaatar city has been actively run after the issue of bonds and took out borrowing. The study has been based on the budget information, budget revenue, and revenue opportunities.
Ulaanbaatar city's financial power is so limited, and in particular, the power to plan and collect taxes. And that, incidentally, the interest and opportunity for self-financing within the independent fiscal policy. Poor revenue management of the city and inadequate research and analysis have caused an ineffective action to increase budget revenues. On the other hand, a high degree of tax exemptions and relief due to the Central Government's policy and politicians. The researcher considers that there is a possibility of increasing the budget of the city.

The objective of the study is to offer a way to increase the budget revenue of Ulaanbaatar by renewing the property real estate tax policy. A survey was conducted from pre-selected 1150 respondents to investigate their views on the immovable property tax.

국문 초록 (Abstract)

울란바토르는 당초 1950년대에 50만 인구를 기준으로 계획되었다. 그러나 울란바토르의 인구는 135만 명(비공식적으로는 150만 명)에 달했다. 여기에는 몽골의 경제 성장, 환경적 영향, 이주, 빈곤, 도시화 등 여러 요인이 작용했다. 급속한 도시화는 울란바토르의 공공 서비스 제공, 특히 인프라 서비스에 대한 접근성에 영향을 미쳤다 결과적으로 안전하고 건강한 환경에서 사는 사람의 수가 지속적으로 감소해 오고 있다. 도시 인구 중 약 60%가 미개발 지구 혹은 게르(ger) 정착 지구에 거주하고 있다 . 게르 정착 지구는 울란바토르 면적 약 90%를 차지하지만, 중앙 난방, 청정 급수 및 하수도와 같은 기본적인 인프라는 제공되지 않고 있다. 불충분한 인프라 때문에 울란바토르는 대기 오염, 교통 혼잡 및 토양 오염과 같이 시급하게 해결해야 할 중대한 현안에 직면하고 있다.

현재로서는 울란바토르 시가 이들 문제를 해결하는 데 필요한 자금원이 불충분하기 때문에 울란바토르 시의 재정적 역량을 구축하고 강화하는 것이 필요하다. 본 연구는 이 문제를 해결하려는 최초의 연구이다. 2013년 이후 울란바토르 시는 부채 문제에 시달려 왔으며 차관을 도입했다. 본 연구는 예산, 세수 및 세수 기회에 관한 정보를 바탕으로 수행했다.

울란바토르 시의 재정적 역량은 제한적이며, 특히 조세 계획 및 징수 능력이 떨어진다. 우연히도 독립적인 재정 정책에서 자체 자금 조달에 대한 관심 및 기회도 부족하다. 시의 열악한 세수 관리와 부적절한 연구 및 분석이 비효과적인 조치와 예산 증가를 야기해 왔다. 한편 중앙 정부의 정책 및 정치인으로 인해 면제 또는 감세 수준이 높은 편이다. 연구자의 판단으로는 울란바토르의 예산이 증가할 가능성이 있다.

연구의 목적은 부동산 재산세 정책 개정을 통해 울란바토르 시의 세수를 증대할 방안을 제시하는 것이다. 사전에 선정한 1,150명의 응답자를 대상으로 설문 조사를 수행하여 재산세에 대한 의견을 조사하였다.

목차 (Table of Contents)

• CHAPTER 1. INTRODUCTION 1
• 1.1 Background 1
• 1.2 Objective 3
• 1.3 Research Scope and Key Issues 3
• 1.4 Data Source 4
• 1.5 Research Methodology 5
• 1.6 Structure of the Thesis 6
• CHAPTER 2. LITERATURE REVIEW 8
• 2.1 Responsibilities of Local Government 8
• 2.2 The Roles of Local Government Revenue 9
• 2.3 Local Government Revenue Management 9
• 2.3.1 Main revenue sources of Local Government 11
• 2.3.2 Main own-source revenues of Local Government 11
• 2.3.3 The Structure of Revenues in Local Government 13
• 2.3.4. Revenue authority of Local Government 16
• 2.3.5 Features of good local tax 17
• 2.4. Property tax in Theory and Practice 18
• 2.4.1 The Residential Property Tax 20
• 2.4.2. The Non-Residential Property Tax is Not a Good Tax for Local Government 22
• 2.4.3 Issues Related to the Immovable Property Tax in Practice 24
• 2.4.4 How the Property Tax can be Reformed? 27
• 2.5 Research framework 30
• CHAPTER 3. ANALYSIS OF ULAANBAATAR CITY’S CURRENT SITUATION AND REVENUE 31
• 3.1 Background Context of Mongolia’s capital- Ulaanbaatar City 31
• 3.1.1 Urbanization of Ulaanbaatar city. 31
• 3.1.2 Range of Ger Settlement Area Expands in Ulaanbaatar City 32
• 3.1.3 A Real Need to Increase Budget Revenue 34
• 3.2. Current Situation of Revenue Assignment and Revenue Authority of UB 35
• 3.2.1 Legal Framework for the Revenue Assignment 36
• 3.2.2 Revenue Authority of Ulaanbaatar 40
• 3.3 Current Situation of Budget of Ulaanbaatar City 47
• 3.3.1. Total revenue of Ulaanbaatar /2016-2017/ 47
• 3.3.2. Structure of Own-Source Revenue in Ulaanbaatar 51
• 3.3.3. Empirical evidence on main own-source revenues 52
• 3.3.4. International Comparison: Immovable Property tax 54
• 3.4 Immovable Property Tax in UB 55
• 3.4.1 Improvement for tax base definition on the law 56
• 3.4.2 Using Market Value on Nonresidential Immovable Property Tax 58
• 3.4.3 Set Effective Tax Rate on IPT 61
• 3.4.4. Immovable property tax for owned land 63
• 3.4.5 Invalidation to Tax Relief and Remission on Immovable Property tax 65
• 3.5 Issues 68
• 3.6 Summary 69
• CHAPTER 4. ANALYSIS 70
• 4.1 Methodology 70
• 4.2 Data Analysis of Survey 71
• 4.3 Recommendation and Conclusions for Imposition of Immovable Property Tax on Apartment Buildings 83
• 4.3.1 Valuation for Residential Property Tax 84
• 4.3.2 Tax Rate for Residential Property Tax 84
• 4.3.3 Billing system 85
• 4.3.4 Taxpayers’ education on residential property tax 87
• 4.4 Summary 89
• CHAPTER 5. CONCLUSION AND RECOMMENDATIONS 91
• 5.1 Overall Conclusion 91
• 5.2 Conclusion for Increasing Immovable Property Tax revenue 94
• 5.3. Future agenda 95
• BIBLIOGRAPHY 97
• Appendix 101
• 초록 105
• Acknowledgments 107