MERCATO TAXED TO SILENCE

Apr 13 , 2025.

Some parts of Merkato have fallen uncharacteristically silent, contrary to its typical bustle of traders, shoppers, and hawkers vying for business across its sprawling two-square-kilometre expanse. Foot traffic was sparse, with merchants left idly worrying about a future clouded by uncertainty. Even in sections showing signs of recovery, like Shema Tera, where a devastating fire six months ago destroyed scores of shops, cautious optimism was overtaken by the sharp reality of faltering sales and anxieties over whether customers will return. The partial resurrection of Shema Tera’s Nebar Building, its walls slowly rising, stood as a symbol of hope in a sea of concern. While some businesses have resumed operations, it is a fragile comeback. Bunna Tera, a small coffee shop, had women meticulously sorting beans without the reward of bustling sales, conversations outnumbering actual transactions. To fill the gap, an increasing number of shops quietly shut their doors before midday.

Many traders attribute this alarming slump to mounting tax pressures. A coffee retailer found himself saddled with a large VAT bill after tax officials rejected his receipts and recalibrated prices far higher than what he said he earned. With inflation eroding revenues, he can no longer convince long-time customers, especially mothers sensitive to soaring costs, to pay more. Merchant after merchant voices a similar story — closed shops, swollen tax bills, and perpetual penalties, all driving some to the brink of closure. The recent shift from quarterly to monthly VAT filing has only intensified these burdens. Over 4,000 businesses were flagged by the city’s Revenue Bureau for expired licenses, yet the Bureau offered no tangible path to ease traders’ hardship. Even more galling is the Bureau’s insistence on charging employee income taxes, even for workers who do not exist, and ignoring losses linked to defective goods such as substandard coffee beans.

These issues are not confined to one segment of the market. Clothing vendors claim that taxes are levied at prices substantially higher than what they can charge in reality. Oil station operators, manufacturers, and importers echo the grievances, describing how the Bureau’s blanket pricing formulas and valuation methods squeeze margins and threaten livelihoods. Some business owners, especially smaller retailers, have contemplated or already switched to informal trading, fearing the formal system will suffocate them. Despite these complaints, tax officials remain resolute in defending their methods, citing rampant evasion and a mission to raise the tax-to-GDP ratio. While the city authorities believe that standardised market prices prevent fraud and boost revenues, traders argue that the approach crumbles under real-world pressures. For them, survival means pushing back against a system they deem punitive, even if that means abandoning documentation altogether.

PUBLISHED ON Apr 13, 2025 [ VOL 26 , NO 1302]

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