Addis Ababa’s rooftops could yield a bonanza for City Hall – if officials succeed in raking in up to six billion birr annually from a revamped wall and roof tax, a tenfold increase over current revenues.
The administration aims to cover some subsidy expenses with the massive influx of cash from the new tax plan targeting homeowners across the capital city.
The proposed wall and roof tax would be separate from a proposed landmark property tax in the works by the Finance Ministry – set to be the first of its kind in Ethiopia.
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The taxation push comes as the city administration seeks to generate more revenue to fund infrastructure projects and amenities. At the heart of the new wall and roof tax is the notion that homeowners benefit from public services and should therefore contribute.
The tax, first introduced 45 years ago under the former military regime, has been revived with revised rates. The current rates range from less than a birr to 5,000 birr annually.
Under the new directive, rates now vary from 146 birr to 444 birr per square meter, categorized based on building type – residential condos, commercial properties, wooden structures and mud houses. Each category also has up to four sub-categories.
To calculate the tax owed, the new rate is multiplied by the total area of the property and then multiplied by 12 months.
However, as an olive branch, residential property owners will only pay fifty percent of the total tax owed this season. Commercial building owners will pay seventy five percent. But starting next fiscal year, owners must pay the full amount, city officials say.
Of the city’s 1.2 million buildings, only 891,000 are eligible for the decades-old “wall and roof tax,” yet only 182,842 actually pay the tax.