Ethiopia’s parliament has implemented a new tax for all workers to cover the funding gap from USAID’s pause. The revenue will support a new Disaster Risk Response Fund, addressing local humanitarian needs exacerbated by conflicts in various regions. This move comes after Ethiopia’s significant reliance on U.S. aid for its development and humanitarian initiatives in recent years.
On Thursday, Ethiopia’s parliament enacted a new tax affecting all workers to address financial shortfalls stemming from the pause in USAID funding. This tax will contribute to a newly established Ethiopian Disaster Risk Response Fund, intended to support initiatives previously financed by USAID, the nation’s primary partner for humanitarian and development assistance.
The country is currently grappling with ongoing conflicts in various regions, including Tigray, Amhara, and Oromia. These conflicts have resulted in widespread humanitarian needs, affecting millions who require food and health services. The newly instituted tax will impact employees in both the public and private sectors and is set to include mandatory contributions from various industries, including banking and hospitality.
Historically, Ethiopia, with a population exceeding 125 million, has been the largest recipient of U.S. aid in sub-Saharan Africa, receiving $1.8 billion in the 2023 fiscal year. The financial support has been critical for vital services such as food, HIV treatment, vaccines, literacy programs, job creation, and care for approximately one million refugees in the country. However, most of these programs have ceased due to the funding interruption, with USAID personnel assigned to these initiatives placed on administrative leave and potentially facing termination.
Ethiopia’s introduction of a new tax marks a significant response to the financial challenges created by the suspension of USAID funding. As the nation confronts pressing humanitarian issues amid ongoing conflicts, this tax aims to secure resources for essential projects. With all sectors expected to contribute, the financial implications for Ethiopian society are considerable, given the historic dependence on U.S. aid for crucial services.
Original Source: www.newsday.com
