Ministry Makes Excise Tax Adjustment on Selected Commodities

Excise Tax on New 1300 CC & Lower Cars Reduced to 5%

ADDIS ABEBA – Ministry of finance has made new excise tax adjustments on selected commodities including brand new vehicles.

The adjustments have already been included in the Excise tax bill recently proposed to the lawmakers.

Accordingly, the ministry says it has reduced the excise rate levied on new cars with 1,300 CC and below from 30% to 5% percent.

“The revised rate could reduce the price of new cars by up to 83 percent,” Eyob Tekalegn, state minister of finance told reporters on Friday.

The decision to revise the tax on new cars was made partly to encourage local car manufacturers.

The government believes that local industries can produce sufficient vehicles to satisfy the demand of the market, the state minister also said.

The latest tax adjustment has seen the 15 percent excise tax on bottled water reduced to 10 percent.

Eyob also said the proposed 30 percent plus 5 birr excise tax on Tobacco per pack readjusted to 30 percent plus six birrs per pack.

The tax adjustments on cigarettes have been made based on complaints the ministry has received from the public and the lawmakers, said Eyob.

According to Eyob, the latest tax adjustment couldn’t affect the price of commodities from the existing market price as the bill doesn’t impose a tax increase on basic consumption commodities.

The minister blamed those who are destabilizing the market without sufficient market reason for the recent increase in some commodities.

The government has already established a task force to follow-up such issues, he said.

By Sisay Sahlu

Image Caption: Car dealer in Addis Ababa. The recently proposed excise tax bill aims to discourage second-hand import and support local vehicle manufactures. [Photo BBC/File]