Tuesday, October 27, 2026
Home Blog Page 4233

Tax Addition

0

Once you tax you never go back

It was on May 17, 2007, that the Council of Ministers issued a regulation to levy surtax on imported items after the last surtax was lifted in 2002. The directive, which was signed by the late Prime Minister Meles Zenawi, excluded items exempted from customs duty.
The surtax is an additional tax on something already taxed, especially a higher rate of tax on incomes above a certain level. Surtax which is also referred to as a provisionary tax is a temporary tax that is to be used both for monitory or fiscal reasons.
The government levied a surtax on imports during the Ethio-Eritrean war in 2000, to subsidize the war. Two years later, when the war was over, the tax was lifted.
Sufiyan Ahmed, who was the then Minister of Finance and Economic Development, rationalized the imposition of the new tax as a fiscal measure to combat inflation.
“The imposition of the tax was necessitated with a view to building the financial capacity of the government needed for the intervention programmed to solve the rise in the cost of living, which is particularly affecting urban residents at a low and medium income level,” he was quoted as saying.
After Ethiopia got out of a significant drought-related contraction economy in 2002/03 its economy began rebounding at a rate of 10.7 percent for the next three years until 2006, which was above sub-Sharan average of 5.8 percent. Also, real per capita income also increased to an average of seven percent. This is why inflation increased from single digit figures before 2005 and skyrocketed to 18.5 percent at the end of 2006. Non-food inflation was as high as 17.3 in the same period of 2006.
Non-food inflation hiked because of large scale public investments, a rapid expansion of domestic credit and upward adjustments in controlled fuel prices in May 2006. The annual national inflation for 2017 was 18 percent and in February it was one percent higher.
In hopes of discouraging consumer demand, the government took monitory and fiscal measures, including introducing surtax on imports. Tadesse Lencho (PhD), a prominent tax lawyer and Assistant Professor of Law, agreed with imposing an additional 10 percent tax at the time to combat inflation.
“Demand for goods goes down when the price goes up,” he said. “As the regulation excluded capital goods the intention is clear that the government wanted to control consumption at the time.”
In addition, international organizations like the IMF and the World Bank recommended that the government take fiscal and monitory measures to combat inflation the year the tax was levied.
The IMF Staff Report for the 2007 Article IV Consultation encouraged the authorities to make forceful fiscal adjustments (some new revenue measures and cuts in nonpriority expenditures) and support them with a tighter monetary policy and greater exchange rate flexibility to ease demand pressures and start to push inflation downward. The same report also stated that official reserves decline mainly because disbursements of external assistance have been delayed.
However, after 12 years, inflation remained double-digit and the surtax remained part of the government’s sources of revenue.
Tadesse argues that in comparison with the nature of the surtax, having it intact for the past 12 years is extraordinary. The government should have lifted the tax early after meeting its goals.
In June 2010 country’s level overall inflation rate (annual change based on 12 month moving average) stood at 2.8 percent which was 33.6 percentage points lower than the corresponding annual average rate of 36.4 percent in June 2009. In this regard, the general moving average inflation rate was 46.1 in February 2009 and consequently declined to 2.8 percent in June 2010. In a similar way, the food moving average inflation rate has declined from 61.1 percent in February 2009 to -5.4 percent in June 2010. The Moving Average Inflation rate of non-food components decreased by 5.5 percentage points as compared to the one observed in June 2009.
“One can’t suggest the government lift the10 percent as inflation is still high and double-digit,” he said. “However, the tax is no longer a means to regulate the inflation and the government should come up with other interventions to combat or raise it significantly as this one is already blunted.”
The renowned tax and business law specialist associates the issue with antibiotics which have been taken longer than ordered by a doctor.
“The knife can no more cut and the tax history of our country shows addictive nature,” said Tadesse.
He recalled the existing tax called Ashura, which was levied on the immovable transaction in the late1940s. Tadesse could even find the proclamation suggesting four percent taxation on the transaction for research purposes, but the tax is still collectible. The purpose of the Ashura tax was used as a title deed. Now, however there is such a deed and the government still collects the Ashura tax.
“The fact that the government didn’t lift this tax on time will prove costly, and this instrument is already blunted. There are many excise taxes” he added.

INNOVATION & THE PROFIT SYSTEM

0

The rigidly established economic regime of the modern world system is excessively focused on profit, at the expense of almost everything else. This includes human life itself! If truth be told, the world of capital has never been in tune with the world of humanity. Organized capital, as a non-living construct of social existence, has no conscience, therefore does not have much respect neither for life nor the general notion of sustainability. Capital’s systemic and brutal domination of collective existence came into being after the awarding of personhood to its operational arms, namely the corporations/companies. This status of ‘legal personality’ facilitated the expansion as well as the penetration of capital into the once sacrosanct spheres of life, collective or otherwise!
Today, transnational capital in its various forms; finance, industrial, etc., rule the world. The techno-sphere, which has taken over traditional labor-intensive realm, fully depends on the largess of capital. Without capital, modernity will come to a complete stop. Herein lies the problem! On one hand, capital wants continuous profit for its reproduction, by all means necessary. On the other hand, the techno-sphere, which leverages capital, has to take into consideration, at least to a large extent, the needs and desires of the larger human population. To be sure, the techno-sphere itself is also driven by obsessive self-propagation. Often times, these two objectives come to a deadly clash. We believe, the disaster that has accompanied the newer version of Boeing 737 (Max) stems from the above hardly complimentary goals! Boeing engineers could have built a very reliable equipment, had it not been for the constraints imposed (on them) by finance capital, spearheaded by the bean counters. Finance capital has become a formidable predator. Instead of its usual intermediary role, it has become the final arbiter of what is good or bad for society. Without the tech marvel itself, i.e., the flying machine, high finance wouldn’t have been able to intervene, let alone wickedly manipulate innovation. Of course, the global market, as dictated by finance capital, continuously compares prices and operational expenses of various flying equipment. In most cases, as innovative projects progress, the pressure of finance takes a life of its own and tends to dominate the engineering portion of the whole innovative concoction. Anyone raising valid technical reservation about design, manufacturing, operation, etc. of a proposed new equipment would not be regarded as amongst the favored, particularly if the proposed rectifications entail more costs. The result: equipment that look relatively cheap, but not very reliable. See the articles next column and on page 44.
When such huge organizations like Boeing, which are engaged in the manufacturing of critical equipment as passenger aircrafts, fall for short-term gains at the expense of long-term credibility and reliability, consequences can be non-forgiving, just like the accidents that visited the two unfortunate aircrafts in Indonesia and here in Ethiopia. When it comes to Boeing 737-(8, 9, 10) Max, there were and still are plenty of unanswered questions, criticism and outright objections from informed sources. Boeing tried to fit the bigger engines of the Max, which is more fuel efficient, on the old 737 frame; so to speak. This necessitated the moving of the engines a bit forward, which created aerodynamic instability. To rectify the major instabilities of stalling and nose-diving, Boeing engineers installed instruments, which depended, rather significantly, on computer software and sensors. It is this ad hoc measure that is now attracting attention. If truth be told, without excessive dependence on modern computers, this aerodynamically unstable plane would not have been able to see the light of day, as it would be vary dangerous to operate it manually!
Almost all countries in the world decided to ground these aircrafts as soon as the demise of ET 302 was known. There were compelling reasons to do so. Communication between the Captain and the tower was one. The crash site and witness report was another. The flight captain requested for an emergency landing as soon the aircraft was airborne, citing problems with the flight control system. Nonetheless (and initially at least) FAA (Federal Aviation Administration USA) and Boeing were reluctant to ground the 737-Max series, even after the widespread opinion about the similarity of the two deadly accidents. (Indonesia and Ethiopia). It took the president of the USA to finally halt the operation of these aircrafts in the US. The real issue behind such maneuvering is the consistent tug of war between profit and safety. This is one phenomenon that is happening all over the modern world system. Big Oil, Big Pharma, the giant Food & Beverage industries, etc., are some of the huge global entities that can easily sway opinions or even influence legislations in favor of their interests, i.e., profit, against the health and safety of collective humanity!
“Planes are becoming far too complex to fly. Pilots are no longer needed, but rather computer scientists from MIT. I see it all the time in many products. Always seeking to go one unnecessary step further, when often old and simpler is far better.” President Donald Trump. Good Day!

Contractors associations merge

0

Despite some friction members of Association of Ethiopian Class One Contractors have agreed to merge with the Construction Contractors Association of Ethiopia (CCAE), under a single association.
Recently, the Association which represents grade one contractors conducted its general assembly where they voted to merge under CCAE. During the event at Hyatt Regency Hotel, 91 of the members voted to be included under CCAE, which has members from grade one to ten construction contractors and was established over a quarter century ago. However, 12 members opposed and signed a petition for another meeting. According to the memorandum, the grade one association meeting had to be called if 10 percent of the quorum requested it. Based on that, the second meeting was held on Saturday March 9 at Capital Hotel and Spa to revote for a merger. At that meeting, all but one agreed to unite for sector representation under CCAE.
Sisay Desta, president of Association of Ethiopian Class One Contractors and owner of Afro Tsion Construction, told Capital that some of the members were confused about the merger which is why they signed the petition.
“At the meeting that took six hours we reached a consensus to merge with national association, because it’s better if we are united,” Sisay said.
According to Sisay, this will help them focus on improving their capacity and competing with foreign construction companies. CCEA is mainly focusing on supporting its members to improve their capacities, enabling them to get projects and solving job security challenges.
“For the past five months the leaders of the two associations have talked about narrowing their gaps and taking the agendas of the two associations as their own problem and fighting challenges together,” he said.
“At the same time the government’s GTP II strategy for the construction sector says local firms should take 70 percent of the total portion on the construction sector, but the reality now is that 80 percent of the sector is taken by foreign contractors. So when we come together we shall fight the current reality strongly and promote the sector so CCEA members get jobs in any ways including joint ventures with big contractors,” he explained.
“During the latest meeting we talked about the merger and its benefit and almost all members agreed,” Sisay said.
Based on the merging strategy, CCEA will hold 7 of the nine board members since their members are big and the balance will be taken by grade one contractors. At the same time the chairman will be elected from the old association and the deputy will be a grade one contractor. The grade one association was formed about 12 years ago to solve problems faced by big contractors.
Amha Sime, president of CCEA, told Capital that working together benefits everyone.

Ethiopia launches national space policy

0

Ethiopia has drafted a space policy aiming to support the continued growth in the country and prepare a structure to supervise space affairs while safeguarding national security.
Ethiopia established The Space Science and Technology Council and Ethiopian Space Science Technology in 2016.
Designed by the Ethiopian Space and Technology Institute, the policy combined structures that can be implemented in three phases.
The first phase, which is considered to be the basis for space policy, incorporates the building of space technology capacity, human power, space infrastructure and supervising space related issues.
Integrating the study of space science with national development strategies to facilitate the country’s economic, social; infrastructure development is the second stage, in addition to conserving natural recourses, climate change and natural disaster prevention. Using space for commercial purpose is also incorporated in this stage.
The final stage will focus on supporting the domestic space industry and the innovation required to bring to market commercial technologies. The government looks to continue partnerships with international partners to pool data for mutual benefit and obtain services and technologies that would otherwise be unavailable.
Above all, the space policy puts military and security issues at the top of the top agenda.
This is the first time space policy will play a role in economic development. It will also take into account natural resources management, development of infrastructure, climate change and commercial purposes. The policy supports advancing integration of space technologies. It also advocates for the study of space.
The policy is designed for space exploration and earth observation; to have useful satellite images, and integrating various satellites to facilitate the exchange of information conducive for service delivery.
In connection with the growth and capability of the national space development, the policy states the necessity of having two independent sectors of space study, civilians and the military.
In Ethiopia, all communication and broadcasting companies are dependent on foreign firms to operate and pay a huge amount of money. The country spends over 44 million USD to rent satellites and the project, therefore, helps the country to save this money.