Ethiopia anti-tax protests spread (CNBC Africa)

by CNBC Africa

Jared Jeffrey, NKC African Economics – According to ESAT, protests by small business owners, which began last week in Addis Ababa and parts of Oromia, have spread to towns in the Southern Nations, Nationalities and Peoples’ (SNNP) region.

The protests are against new taxes being imposed on businesses with annual turnover of up to Etb100,000 ($4,300). The revised Income Tax Proclamation, which came into effect on July 7 (the start of the fiscal year), saw tax collectors estimating the turnover of small businesses (such as roadside hairdressers and coffee vendors), with some entrepreneurs complaining that the estimates were as much as 10 times their actual daily sales figures.

The protests have largely been peaceful.

In parts of Oromia and SNNP, businesses remained shut (July 17-19) and transport services were disrupted.

More aggressive forms of protest have been recorded in Ambo city, the site of some of the bloodiest anti-government protests in 2016. There, disgruntled residents attacked State-owned vehicles on July 13, according to Addis Standard.

Meanwhile, citizens posted pictures of public infrastructure (roads, schools etc.) in a shoddy state on social media in order to make the point that taxes were not being used to improve their lot, and implying that more taxes would simply lead to more embezzlement.

The attitude towards the tax changes is indicative of the lack of legitimacy the authorities are coming up against. The belief that tax revenues will be embezzled rather than ploughed back into infrastructure and services speaks to a distrust in the government and a lack of accountability.

Authorities have defended the taxes and said that the anger expressed is due to business owners being confused or trying to avoid paying their dues. Birhanu Tadesse, coordinator of the tax policy directorate at the ministry of finance and economic cooperation, was quoted in the media as saying: “This is disgraceful and shows how their tax understanding is small.”

ethiopia-graphThe state of emergency that has been in place since October last year is expected to be lifted at the end of July.

The extraordinary measures put in place have seen the number of protests drop considerably (see graph) and have restored order.

Anecdotal evidence suggests that many Ethiopians have welcomed the return to stability, but as these latest protests show, the underlying discontent that fuelled the uprising has not been addressed and the potential for further unrest remains.

A judge in Ambo described this potential to Agence France-Presse in June by saying: “It’s a fire under ashes.”

However, it is expected that authorities have learnt from 2016 and will be quick to snuff out any rekindling of resistance.

CNBC Africa

Jared Jeffrey is a Political Analyst at NKC African Economics.

Filed in: Current Affairs / News