Etenesh Abera/ Addis Standard
Addis Abeba, July 17/2017 – Frustrated by a recent significant tax increase in category “C” tax payers, which consists small businesses with an annual turnover of up to 100,000 Birr, cities in various parts of the Oromia regional state are seeing protesters testing the streets again.
On Thursday July 13, Addisu Arega, Oromia state public relations head, confirmed that residents opposing the new tax hike have damaged two state owned vehicles in Ambo city, 120 kms west of the capital Addis Abeba, and a city that saw the bloodiest crackdown during the 2016 nationwide anti-government protests that led to current State of Emergency.
Similarly, shocked by the increase, many small business owners in the capital Addis Abeba are queuing to return their business licenses or file complaints with the revenue authority.
And this morning, undeterred by the ongoing State of Emergency, small business owners in Woliso city, 110 km west of Addis Abeba, and in Ambo have shut their businesses in protest and transport services going out of both cities to destinations including the capital Addis Abeba are disrupted, according to eye witnesses. Social media posts also show that residents of other cities and towns in various parts of the region are fiercely resisting the new tax hike.
Although he claimed that the situation was largely under control, Addisu Arega also confirmed that there were plans for region-wide protests.
New tax rule
The revised Income Tax Proclamation, which was drafted by the Ethiopian Revenue and Customs Authority (ECRA) in collaboration with the Ministry of Finance and Economic Cooperation (MoFEC) came into effect as of the end of the fiscal year on July 07, 2017.
In the case of Addis Abeba, ERCA officials said that the authority deployed some 942 assessors who came from MoFEC and the Ministry of Trade (MoT) and constituted three supervision committees and 119 different inspection groups. They have been sent to evaluate the income of an estimated 148,000 traders in the city.
The state of Oromia too pursued similar methods over the past few months.
However, several letters sent from ERCA to small businesses in Addis Abeba, as well as those in Oromia state show that traders of small businesses such as street side coffee vendors, barbers, internet cafes and kiosks have received notice letters demanding them to pay annual taxes as high as 50, 000 birr and more.
Martha, a hair salon owner who recently returned from Saudi Arabia using the three month amnesty, and opened her new hair salon told Addis Standard that after the assessors came to her salon and held a few minute’s conversation, she received a letter estimating her daily income to be 1, 900 birr, which she says “would not even be my monthly income.” According to the new estimate, Martha is required to pay 10, 550 birr annual tax. “I can’t pay that much, and if they jail me for that, they can,” she said.
Despite these complaints, authorities are adamant to review amounts levied on these businesses, saying businesses are simply trying to avoid paying taxes. On July 05, Nestanet Abera, ERCA deputy director for Addis Abeba tax division, told journalists that the confusion was rather due to lack of understanding than the amounts levied. “We have not imposed such taxes. The confusion is due to lack of understanding and the tendency of considering daily incomes as taxes,” Netsanet said, “our assessments were based on fairness and are appropriate.”
She also warned complainants to file their complaints individually rather than in groups, as was seen during the last few weeks.
The weekly English Addis Fortune, quoted Birhanu Tadesse, coordinator of the tax policy directorate at MoFEC as saying, “This is disgraceful and shows how their tax understanding is small.”
Lemma Megerssa, President of the Oromia state, on his part said during a meeting over the weekend by the Caffee, the legislature of Oromia, that the region’s tax authorities would work hard to look into irregularities and complaints.
Over the last week, residents of several cities and towns in Oromia have been posting pictures of damaged public infrastructures such as roads, schools and hospitals on social media to make a point that taxes collected are simply embezzled than used to improve people’s lives.