By Kebour Ghenna
You’ve got to admire the Ethiopian government. Even in the worst of times, it never runs out of creative ideas for how to squeeze a little more blood from the turnip.
Take the latest “reform” to the income tax law. It sounds innocent enough, a few adjustments to the tax brackets. But under the shiny wrapping is the same old trick: rob the poor to “balance the books.”
Here’s the update. Under the new tax schedule, anyone earning ETB 2,000 or less per month is spared. Those pulling in less than ETB 4,000 pay 15%. If you make less than ETB 7,000? That’s 20%. And so on.
Sounds fair? Maybe, until you realize that at today’s exchange rate, even someone earning ETB 8,000 a month – a sum still taxable – is making barely $2 a day. That’s the UN poverty line, folks. Yes, the government of Ethiopia, fresh from its budget meetings with the IMF and World Bank, now wants to tax its poorest citizens, those barely able to buy cooking oil or bus fare.
They say it’s necessary. That the government can’t “balance its books” otherwise. That this tax burden is essential for growth. But that’s utter nonsense, the kind peddled by accounting wizards who’ve never met a market or a hungry child.
Let’s be clear about one thing. When the government taxes the poorest, it doesn’t collect from “savers” or “speculators.” It collects from people who spend everything they earn. Not on vacations or luxury goods but on food, rent, school fees, and the occasional trip to the clinic. These expenditures don’t disappear into a black hole; they go right back into the economy. They pay the shopkeeper, the minibus driver, the farmer, the tailor… and yes, they pay taxes again in the form of VAT.
The money circulates. It creates jobs. It supports local businesses. It stimulates demand that thing economists pretend to care about. And it even raises tax revenue indirectly.
So why take that money away?
Because neoliberal myth-makers, the budget balancers and austerity disciples, have convinced governments that taxing the poor is “fiscal responsibility.” That the only way to be taken seriously in Washington or Paris is to look serious while holding the poor upside down and shaking them for loose change.
But taxing those who have no cushion, no margin, no savings, is not responsible. It’s reckless. And it’s bad economics.
If you want to grow the economy, you let the poor breathe. You raise the tax threshold to reflect a livable income, not one anchored in 1994. You cut taxes on wages under ETB 8,000, and maybe even subsidize essentials for those living under $2 a day.
You tax where the money is. You go after monopolies. You curb unnecessary perks for top officials. You plug the billion-birr leakages in procurement. You make the richest pay their fair share.
And while you’re at it, you create a coherent, productive investment plan, one that actually supports exports, manufacturing, and jobs. That helps bring down inflation not by strangling demand, but by boosting local supply and reducing import dependence.
There are always alternatives. The decision to suppress income, to tax the bottom while coddling the top, is a political choice, not an economic necessity.
So the next time someone says Ethiopia needs to “tighten its belt” or “balance the budget,” ask them why the burden always falls on the smallest shoulders. Because the real task isn’t to squeeze more tax from the poor, it’s to broaden the economic pie. That means investing in people, in productivity, and in policies that allow the lowest earners to spend, grow, and thrive. If we want a bigger future, we have to start by feeding the parts of the economy that are still hungry.
__
Editor’s Note : Views in the article do not necessarily reflect the views of borkena.com
The article appeared first on Kebour Ghenna’s Personal Social Media page.
__
Support Borkena : https://borkena.com/subscribe-borkena/
Join our Telegram Channel : t.me/borkena
Like borkena on Facebook
Add your business to Ethiopian Business Listing / Ethiopian Business Directory Business Listing Toronto
Join the conversation. Follow us on X (Formerly Twitter) @zborkena to get the latest Ethiopian News updates regularly. Subscribe to YouTube channel To share information or for submission, send e-mail to info@borkena.com
Are the threshold numbers as taxable mentioned in this article after all eligible deductibles? We need more elaboration.
And then up to a third of gov revenue is being siphoned off by the nouveau riche and crooks most of whom are PP members.
1). Abiy Invited Ethiopians Abroad to Return & Serve Ethiopia: I wonder what keeps critics of Abiy’s Government [AG] from returning and pitching in their expertise.
As to those in Ethiopia criticizing AG from the sidelines, why not join your favorite parties to effect change & implement economic policies you believe serves Ethiopia best?
2). Country vs. Politics: Back in EPLF-TPLF’s 1990s Ethiopia, intellectuals abroad were whining about quality of education deterioration. So, however much I hated the regime & despite my Derg’s child prisoner painful past, I posted this reply:
≈ “I am not a teacher, but let’s form Ethio Volunteers Club & go teach for a semester in our fields of study! Let’s cover our expenses, but ask for free lodgings if necessary!” None were interested! The whining ebbed, but the problem worsened!
3). The Bigger Picture: Despite AG’s flaws, Ethiopia is still standing thanks to Abiy’s efforts to keep Ethiopia afloat at a turbulent time [Bone-dry looted Ethiopia; TPLF’s War; COVID; Sanctions; Proxy Wars; Drought; Currency Devaluation; etc.]:
i). TPLF’s hostage PM with no salary to pay government employees [$1 billion charity from UAE’s Prince MBZ saved Ethiopia from collapse]: youtu.be/Pg3WuF1eXww?t=5
ii). Compare: (a). Debt at 59% of GDP at TPLF’s fall: youtu.be/upKEL9wQvrY?t=1200 ;
(b). Growth at 8% under Abiy [IMF] debt down to 37%: youtu.be/SJBVcbtzS3A?t=25
iii). From Beggar to Self-Sufficiency and/or Exporter: (a). [ youtu.be/f8Ou-fTqoyw ] ;
(b). [ youtu.be/IFkIFUFWHgw ] ; (c). [ youtu.be/7CdjCRqWeWI ]
iv). Poverty Alleviation – Changing Lives a Neighborhood at a Time:
(a). [ youtu.be/WEGe7BYdAxQ ] ; (b). [ youtu.be/bAe3tqBIkJw?t=16 ]
(c). [ youtu.be/1Ur5ME-j9jg?t=21 ] ; (d). [ youtu.be/Cv66FHZGsfY?t=17 ]
(e). [ youtu.be/-GeH4wg0VbQ?t=30 ] ; (f). [ youtu.be/KJD0Tmysfyc ]
እውነትም ሞኙ! What an idiot, pathological liar! Extreme poverty is a reality in Ethiopia under Abiy Ahmed. Our people are living through. it.