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Parliament Enacts Sweeping Property Tax, Dividing Lawmakers Over Fairness, Economic Impact

Jan 14 , 2025

Federal legislators passed a landmark property tax law today, granting regional states and municipal authorities new powers to levy taxes on land-use rights and housing. The bill, with four votes against and 10 abstentions, sets the taxable base at 25pc of a property’s total value, with rates ranging from 0.1pc to one percent. Lawmakers backing the legislation believe it will reduce reliance on federal funding and boost the country’s tax-to-GDP ratio, which they note lags behind other sub-Saharan African countries.

Federal officials argue the change will provide local authorities with a dependable revenue stream for infrastructure projects, including roads and public works. By broadening the tax base, they contend, regional administrations can become less dependent on federal subsidies.

Dissenting voices in Parliament, however, say the law risks placing an excessive burden on low-income earners and small businesses.

Desalegn Chanie (MP-NaMA) described the bill as unfair, attributing his opposition to the already high income tax rate, where salaries above 10,000 Br are taxed 35pc, compared with under 10pc in some African countries. He argued that several homes are financed with loans and urged that properties still under mortgage should be exempt from the new levy. Desalegn also warned that layering the new property tax atop existing taxes could stifle economic activities by overstretching households and businesses.

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