Ethiopia Implements New Tax to Address Funding Gap After USAID Suspension
Ethiopia has implemented a new tax for workers to mitigate the financial shortfall caused by the suspension of USAID funding. This revenue will support a Disaster Risk Response Fund for essential projects. The country is experiencing significant humanitarian needs due to ongoing conflicts, and past U.S. aid significantly contributed to various life-saving programs.
On Thursday, Ethiopia’s parliament enacted a new tax targeted at all workers, aimed at offsetting the funding deficit resulting from the pause in USAID financial support. The revenues generated will contribute to the Ethiopian Disaster Risk Response Fund, which will finance projects that were previously supported by USAID, Ethiopia’s primary development and humanitarian partner.
Ethiopia is currently grappling with ongoing conflicts in several regions, including Tigray, which is in the process of recovering from a two-year struggle, as well as Amhara and Oromia. These conflicts have created a dire humanitarian situation, with millions of individuals in urgent need of food assistance and healthcare services.
The newly instituted tax will impact employees in both the private and public sectors, and companies across various industries, such as banking and hospitality, will also be required to make mandatory contributions. The proposed legislation has been submitted to a parliamentary committee for further discussion regarding the specific tax rates.
As a country with a population exceeding 125 million, Ethiopia has historically been the largest recipient of U.S. aid in sub-Saharan Africa, receiving $1.8 billion during the 2023 fiscal year. This aid has been utilized for crucial needs, such as food assistance, HIV treatments, vaccination programs, literacy initiatives, and job creation, benefiting even the one million refugees residing in Ethiopia.
However, most of these essential programs have been halted. Personnel from USAID managing these initiatives have been placed on administrative leave and instructed not to engage in their work due to the threat of job termination.
Ethiopia’s introduction of a new tax reflects efforts to address the financial gap created by the suspension of USAID funding. As the nation faces significant humanitarian challenges, the funds generated will be directed towards crucial disaster response initiatives. The impact of previous U.S. aid cuts continues to resonate, affecting vital health and educational services across the country.
Original Source: www.newsday.com
