Getahun Tsegaye
Staff Reporter
Addis Ababa, Ethiopia – The Confederation of Ethiopian Trade Unions (CETU) has urged the Ethiopian government to significantly raise the monthly income threshold that is exempt from taxation. According to TIK VAH, a local Telegram Channel news outlet, CETU is calling for a new tax-exempt limit of 8,384 Ethiopian Birr, a proposal that far exceeds the government’s current draft, which seeks to exempt only monthly incomes up to 2,000 Birr.
The call comes as the Ministry of Finance moves to revise the country’s existing income tax law, Proclamation 979/2008, which has remained unchanged for the past nine years. While the proposed amendment marks a shift from the current tax-exempt limit of 600 Birr to 2,000 Birr, CETU argues that this figure is not reflective of the present cost of living and inflationary pressures faced by the nation’s workforce.
In a formal letter submitted to the Ministry, CETU President Kassahun Follo insisted that the exemption should be aligned with international poverty benchmarks. “The income tax exemption should be extended to salaries up to 8,384 Birr per month,” Follo stated, noting that the World Bank defines individuals earning less than three U.S. dollars a day as living in poverty. “The tax structure must consider the economic hardship facing workers,” he added.
CETU has also recommended a progressive tax system for higher income brackets. Their proposed structure is as follows:
- 10% for monthly earnings between 8,384 Birr and 22,974 Birr
- 15% for earnings between 22,975 Birr and 44,530 Birr
- 20% for earnings between 44,531 Birr and 72,336 Birr
- 25% for earnings between 72,337 Birr and 107,449 Birr
- 30% for earnings between 107,450 Birr and 150,107 Birr
- 35% for earnings above 150,108 Birr
Currently, under the existing law, a flat 35% tax is applied to salaries starting from 10,900 Birr. While the Ministry of Finance’s draft amendment proposed exempting salaries at incremental levels of 1,200, 1,600, and 2,000 Birr, CETU believes these figures fall short of meeting workers’ basic financial needs.
As the debate around tax reform intensifies, various labor and civil society groups have echoed CETU’s concerns. According to Addis Reporter, many argue that the government’s proposed income tax revisions fail to adequately address the widening gap between wages and the cost of living.
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