The Finance Minister, Ken Ofori-Atta, says it is a herculean task for African leaders, especially to commence infrastructure development without taxation.
He argues that if African leaders don’t raise taxes on people and businesses, they won’t be able to invest heavily in infrastructure development across their diverse nations.
Mesfin Tasew Bekele, group chief executive officer of Ethiopian Airlines, bemoaned the high taxes that African governments impose on the industry and other companies with a meager infrastructure.
Speaking on January 28, 2023, at a Business and Policy Dialogue and Policy Dialogue called “The Kwahu Summit on Africa’s Prosperity,” organized by the African Prosperity Network (APN) in partnership with the Presidency and the AfCFTA Secretariat, he claimed that African airlines charge exorbitant prices when compared to those operating in other regions.
Bekele laments that “Speaking during a Business and Policy Dialogue, dubbed, ‘The Kwahu Summit on Africa’s Prosperity’, organized by the African Prosperity Network (APN) in collaboration with the Presidency and the AfCFTA Secretariat, on January 28, 2023, he said airline fares in Africa are very expensive compared to airlines in other jurisdiction.
Mr. Bekele laments, “many countries believe that air transport is good for the rich and has to be heavily taxed. I can give an example, the airfare between Lomé and Accra, 50% of it goes to government and other taxes. This has made air transport expensive to use in Africa compared to the rest of the world. It is understood that African governments want to generate revenue and are taxing the airlines. But the tax should be reasonable… We don’t have tax issues in the US, Europe, Middle East and Asia.”
He urged African governments to compare their airline taxation policies.
He appealed to African governments to benchmark the tax systems on airlines.
“We have problems of tax only in Africa, why? I think governments have to benchmark the tax systems on indigenous airlines, this is dwarfing the indigenous African airlines by making the fare very expensive and non-affordable to Africans. But at the same time, a different regime of tax is applied to airlines in Africa. Let me be honest with you, the offices of small airlines in Africa are often closed due to unreasonable tax, we have to correct this. Again, infrastructure. For air transport to be safe, and efficient, we need to have enough airports and upgrade existing airports”.
When responding to the Ethiopian Airlines Group CEO, Mr. Ofori-Atta said,
“So I listened to my friend from Ethiopian airlines, and yes we must ensure that we make it a tax-friendly continent”.
“He would want us in government to support infrastructure and ensure that you fly easily around the continent. It’s a very difficult balance and I felt the need to at least mention it. And to represent the difficulties that African finance ministers face. How do you build infrastructure and not tax and still improve intra-African trade? That is our challenge,” he added.
