Mongolia will cut the gold mining tax to reduce illegal gold mining and smuggling and to boost state control of gold trade. According to a revision of the minerals law passed by parliament on Friday, the gold mining tax is reduced from 10 percent to 2.5 percent for gold mining companies that sell their mined gold to the central bank or its accredited commercial banks. Meanwhile, the royalty rate was eliminated for gold mining operations. The revision, which is valid for five years, is boycotted by the opposition Mongolian People's Party. With the measures, tax revenue will drop, but currency reserves of the central bank will increase. "We estimated that revenue in tax will go down by 40 million to 50 million U.S. dollars, while currency reserves in the bank will increase by 1.7 billion to 2 billion U.S. dollars," said Mining Minister Gankhuyag Davaajav. "When the tax rate drops, the gold trade amount will increase and it will boost money flow into the economy," he said.