Ethiopia’s parliament has introduced a new tax to compensate for a pause in USAID funding, creating a Disaster Risk Response Fund to finance critical projects. The tax will apply to all workers and companies, amid ongoing regional conflicts that have intensified the need for aid. The country, historically reliant on U.S. assistance, now faces significant challenges as many vital programs are suspended due to the funding gap.
Ethiopia’s parliament has recently enacted a new tax aimed at addressing the financial shortfall resulting from a pause in USAID funding. This tax will be applicable to all workers, both in the private and public sectors, to support the newly established Ethiopian Disaster Risk Response Fund, which will finance critical projects that were previously reliant on USAID support.
The introduction of this tax comes amid ongoing conflicts in regions such as Tigray, Amhara, and Oromia, which have left millions in need of basic necessities such as food and healthcare. The new legislation will also impose mandatory contributions from various companies, including those in the banking and hospitality sectors, with details regarding the contribution percentages currently under review by a parliamentary committee.
Historically, Ethiopia has been the largest recipient of U.S. aid in sub-Saharan Africa, securing $1.8 billion in the 2023 financial year. These funds have been crucial not only for vital food assistance but also for programs addressing HIV medications, vaccines, literacy initiatives, and the employment needs of approximately one million refugees residing in Ethiopia. However, many of these essential programs are now suspended, as USAID employees overseeing them have been placed on administrative leave amid termination threats.
The recent introduction of a new tax in Ethiopia serves as a proactive measure to mitigate the financial impact of the USAID funding hiatus. By creating the Ethiopian Disaster Risk Response Fund, the government aims to sustain essential support for its population amidst ongoing regional conflicts. This development highlights the critical dependence on international aid and the challenges faced when such support is interrupted.
Original Source: www.newsday.com
