Upto 500% Excise Tax Proposed on Secondhand Cars

ADDIS ABABA – Authorities proposed up to 500 percent excise tax on imported second-hand cars, a new bill tabled for parliament on Tuesday reveals.

The draft law proposes an excise tax increase on items that are considered hazardous to health and cause a social problem as well as what the authorities believe are luxury items, said Chala Lemi, government whip.

Officials believe second-hand cars as one of the major reasons for increasing road accidents in the country.

Speaking to lawmakers fortnights ago, minister of transport Dagmawit Moges said discouraging used cars import through tax increase could help to curve the challenge.

Last year alone, over 35, 450 vehicles have been imported into the country and the majority of them were reportedly secondhand. They are hit with an import tax of up to 200% each making it owning a car for many Ethiopians a pipe dream.

Increasing tax 

The bill tabled proposes an introduction of a 500 percent excise tax on vehicles that are 1800 cubic centimeters (CC) and used for over seven years.

Buyers will be subjected to pay 100 percent and 200 percent excise tax for four years and just seven years old cars, respectively.

Besides, the bill also makes a 400 percent excise tax payment obligatory for a seven-year-old car with a seating capacity of 16 passengers.

The bill also imposes a 460 percent excise tax on any vehicle with cylinder capacity between 1300cc and 1800 cc and used over seven years.

Members of parliament have directed the bill to the respective standing committee for further discussion after a brief discussion

They said the inclusion of some items such as household items should be properly reviewed by the standing committee.

Other items subject to Excise tax

Apart from cars, commodities liable to the proposed law includes fats and oil (upto 50%), sugar and sugar confectionery (upto 30%), soft drink powders (25%), non-alcoholic beverages (20%), salt (25%), mineral fuel and oil and their product (30 percent), Rubber tyre (5%), perfumes and cosmetics (100%), plastic shopping bags (40 birr/kg), human hairs and wigs (40%), Carpets (8%), TV and Camera (10%) and more.

Based on the bill, a beer exclusively produced from barley grown and malted in Ethiopia will be subjected to a 35% excise tax while a veer the local raw material content of which excluding water is at least 75% by weight of its constituents will be subjected to 30% excise tax.

It also proposes a 40 percent excise tax for all types of wines including fortified wines, fermented wines, and other types of alcoholic beverages obtained by fermentation of fruits. Drinks with 80% alcoholic content could be subjected to an 80% excise tax.

Tobacco and tobacco products, on the other hand, will be subjected to up to 30 percent tax (leaf 20%, cigarettes per pack 30% as well as Cigar and others 30%/kg)

By Sisay Sahlu

[Photo File/BBC]