Ethiopia forced to withdraw tax hike that resulted in protests

Ethiopian authorities have withdrawn a proposed tax hike for small businesses, the Addis Standard news portal has reported.

The withdrawal comes in the wake of protests by the affected business people. Shops were closed in the Oromia State early last week in defiance of the new tax, by Friday, the action had spread to the capital Addis Ababa, with shops in bustling parts all closed.

The portal cited the head of the Ethiopia Revenue and Customs Authority (ERCA), Kebede Chane, as saying the decision to scrap the tax hike was hinged to the complaints they had received from affected persons.

He is also quoted by other local portals to have said that micro business owners including barbers / hair dressers, tailors, laborers, and street coffee vendors will be encouraged to pay “what they agree to pay.”

The tax in question targets businesses in category ‘C’ of the taxation bracket. Such outfits had an annual turnover of up to 100,000 Birr (about $4,300), it was aimed primarily at boosting government revenue. Business people said their opposition to it was because it was over-estimated and the authorities are demanding too much.

As at last week, the Addis Standard described the situation on the ground as a case of ‘testing the streets again.’ They report that police and military were deployed to parts of the region as at Monday, July 17, 2017.

The portal also reported some skirmishes in a city located about 120km west of the capital Addis Ababa. Aside the closure of shops in Addis Ababa, people were also said to have weighed options of returning their business licenses or filing complaints with the tax authorities.

Ethiopia’s biggest problems in the recent past has been of political nature with spreading anti-government protests in Amhara and Oromia regions. On the economic front, Addis Ababa has been lauded by major finance institutions including the World Bank and the International Monetary Fund (IMF).