The new government proposal to boost the tax base and raise much-needed government revenue is facing different forms of protests in the country, especially in Oromia region.
By Abdi Latif Dahir (Quartz Africa) |
A new tax levied by authorities on small businesses and vendors has reportedly led to protests in Ethiopia’s Oromia region with the military and police deployed to bring the situation under control. The tax hike is being imposed on businesses with an annual turnover of up to 100,000 birr ($4,300), as part of a new government proposal to boost the tax base and raise much-needed government revenue.
Residents in Ambo city in Oromia region damaged two state-owned vehicles, according to Addis Standard newspaper, while businesses in Woliso town shut their businesses in protest. The paper also quoted state officials saying that even though the situation was currently under control, there were plans for region-wide protests.
Like many sub Saharan Africa countries, tax collection in Ethiopia is still a low share of GDP when compared with the average for OECD countries of around 34%. Just 15.2% of Ethiopia GDP was generated by tax revenue as of 2015, according to the World Bank. Last year, a World Bank survey also showed that 54% of businesses thought the process of complying with taxation was more burdensome than the amount of due tax itself.
The new reports from Oromia are significant given that it was the genesis of anti-government protests that hit the country in Nov. 2015. The demonstrations initially began in response to the government’s master plan which sought to expand the capital Addis Ababa into neighboring towns and villages inhabited by the Oromo, the country’s largest ethnic group. The Oromo said the plan would displace farmers and stymie the growth of their culture and identity.
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