Local authorities in towns across the Amhara Regional State have begun enforcing newly revised tariff rates, seeking to generate revenue through municipal service fees. The regional government approved the regulation on December 18, 2024, which has begun in Bahir Dar, Dessie, and Gonder. Officials say the revenues will be used for infrastructure improvements and services that directly address local needs. In Bahir Dar, city administrators have drafted and approved a directive detailing how the revised taxes will be put into effect.

The regional state's new regulation classified towns by type such as metropolitan city,  city administration, head and sub-municipality, and developing city. Each category will have its own set of tariffs. According to regional officials, transferring property titles or authenticating inheritance remains exempt from these charges, although standard service fees may apply.

The right to use leased properties is subject to tiered charges: three percent in metropolitan cities, 2.5pc in city administrations, and two percent in other types of towns.

According to local administrators, service fees are set to reflect the type and quality of services offered. Depending on the conditions in each town, fees can be charged at a fixed rate or as a percentage, guided by factors such as local demand for services and affordability. Annual sales for commercial and professional services will incur charges which have increased by 30pc to 60pc. Businesses will also see fees that have increased by 5pc to 20pc; and where fees are tied to specific locations, they may double, going from 10pc.

A new tariff covering emergency and fire services will range from 96 Br to 1,000 Br annually, depending on a commercial entity’s tax payment level.

According to regional officials, the regulation, designed to account for market conditions and economic stresses, is intended to address the budget gap often faced by the regional and local governments.

The Amhara Regional State has approved a 150.67 billion Br budget for the 2024/25 fiscal year, which regional officials hope will accelerate reconstruction and expand public services. The newly approved budget marked a 9.7pc increase from the 137.41 billion Br allocated last year. Regional lawmakers passed the budget in late July 2024, building on what had already been an unprecedented jump in spending during the previous fiscal year.

In 2023/24 alone, the budget leapt by roughly 42 billion Br compared with the previous year.

The regional state's budget relies heavily on revenues generated from the region, which officials expected would cover about two-thirds of overall spending. Federal transfers, including a 46.9 billion Br block grant, round out much of the remainder, along with smaller external donations and special grants earmarked for Sustainable Development Goals (SDG) projects. Mid-year reports, however, painted a sobering picture. The region had collected only 25pc to 28pc of its targeted revenues, undercutting the budget’s ambitious assumptions.

“The regulation can effectively address the financial issues faced by cities considering current market conditions, inflation, and trade dynamics,” said Engdawork Gezahegn, tax affairs coordinator at the Amhara Regional State's Revenue Bureau.

Engdawork disclosed newly included revenue sources, such as an entertainment tax and a 1.5pc hotel room service fee. Charges for waste management have seen an especially steep jump. Once between 100 Br and 400 Br a month, they are set to go as high as 5,000 Br.

“This can support those cities in preparing their annual budgets and finance infrastructure development,” Engdawork told Fortune. “Imposing tariffs will not adversely affect service providers."

Previously, revenue collected by the regional state went into a broad mix of projects, whereas the revised system earmarks taxes more directly for the services that generated it.

"City administrations will now retain funds for core upgrades," he said.

Among those feeling the changes in the tax regime is hotel operator Mohammed Bekele, a resident of Dessie town, whose establishment features 15 rooms, along with food and beverage services. Before the revised tax regime, he paid 400 Br each month for trash removal three times a week. Under the new plan, he expects to pay 4,000 Br for the same service. This year, he paid over 30,000 Br for development contribution and other municipal services.

“We're being made to pay for numerous services now," he told Fortune. The new rates, entertainment fees, and increased waste removal fees, on top of regular taxes, "lead us to wonder whether we can sustain our business.”