City gain authority to tax property


Aimed to the lower burden of federal government to finance infrastructure buildings and increase income of cities, government has decided to give the Authority of property tax to city administrations under the authorization of regional states and the two city administrations.
In the 1st joint special meeting of the 2nd year of the 6th House of Peoples’ Representatives and the House of Federation, held on January 11, 2023 it was stated that infrastructure development and social services in cities is not developing in line with the increasing number of the population.
As to the proposed resolution, the authority of property tax is given to the existing regional states and the two city administrations, while Regional States will give it to the local governors based on their constitutional powers to collect and use the revenue. As indicated on the session, the federal government will prepare a legal frame work including property value rate and taxation principals, percentage of the property tax rate, as well as properties that should be free from property tax.
As shown, the Ministry of Finance is drafting the proclamation ratified as No 1/2023 with 4 votes against and 5 abstentions.
Revenue city administrations and regions and government authorities underlined that generating is not enough to improve living standard of its population.
As stated on the session, increasing of property values in cities has an impact on infrastructure of both federal and regional government owned property. Hence income from property tax is said to support both the federal and regional governments to minimize burden of costs related to infrastructure building.
The resolution proposed various opinions and questions from Members of the Parliament to decide whether the federal government or city administration under the regional state authorization property tax should be collected. The Chairman of the Standing Committee on Planning, Budget and Finance Affairs of the House of Peoples’ Representatives, Desalegn Wadaje, the Chairman of the Standing Committee on Subsidy Budget and Shared Revenues of The House of Federation Honorable Shimels Abdisa and the Federal Minister of Finance Ahmed Shide gave a response and explanation on the matter.
Members of parliament(MPs) argued that the resolution will help to ensure fair use in resources in city administrations and Regional States as it will; prevent theft, expand tax options, expand the development opportunities of regions freed from subsidies, strengthen the provision of infrastructure and service providing, and help solve the challenge of unemployment in cities.
On the other hand MPs also raised an issue citing that Ethiopians were burdened with taxes and that cities should not be given the authority to tax property, but instead use their internal revenue.
Majority of the MPs said in their opinion that the resolution is appropriate and that it will allow the revenue collection system of the country to be updated and help to provide basic services to the society by expanding the infrastructure in towns.
The Speaker of The House of Peoples’ Representatives, Tagesse Chaffo, and the Speaker of The House of Federation, Agegnehu Teshager, co-chaired the same assembly, after a proposal for a resolution regarding the ownership of the property tax was prepared and presented by the Standing Committee on Planning, Budget and Finance of The House of Peoples’ Representatives and the Standing Committee on Subsidy Budget and Shared Revenues of The House of Federation.