The Need to Revisit Ability-to-Pay Principle in the Ethiopian Employment Income Tax System


  • Tekalegn Endryas
  • Wodwossen Fassil


Ability-to-pay; Employment Income Tax; Poverty Reduction


The application of the ability-to-pay principle in a given country supports the realization of a fair tax system and the protection of the basic rights of taxpayers. However, the application of the principle remains unclear in the Ethiopian employment income tax system. This article, through qualitative, comparative, and doctrinal research tools, tried to assess the application of the ability-to-pay principle under the income tax legal regime and its role in contributing to poverty reduction efforts in Ethiopia and to the protection of human rights. The result reveals that the Ethiopian employment income tax structure neglects the personal and family status of the taxpayer, the number of dependents and disability, thereby causing employees to pay the highest price as a result of the ever-increasing cost of living. This raises the need to reconsider the tax policy and amendment of the income tax laws in such a way it ensures tax payment based on the ability-to-pay and assist employees fulfil their basic needs