Ethiopia’s top labor federation is raising alarm over a draft income tax reform bill, warning that it could further strain low-wage workers already pushed to the edge by rising living costs and inflation.

The Confederation of Ethiopian Trade Unions (CETU) said Monday during a public hearing at the House of Peoples’ Representatives that the proposed amendment to the federal income tax proclamation risks widening inequality and failing to reflect the lived realities of most working Ethiopians.

“If Parliament is willing, we can walk together after working hours to hotel areas and show you workers begging for leftovers,” said CETU President Kassahun Follo. “That’s the level of desperation we’re witnessing.”

The hearing brought together lawmakers, Ministry of Finance officials, legal experts, and civil society groups to discuss a draft bill that would raise the monthly tax-free income threshold from 600 birr to 2,000 birr. It also shifts the top 35% tax bracket from 10,900 to 14,000 birr. The government has not revised the income tax structure since 2016, despite years of currency devaluation and persistent double-digit inflation.

The Ministry of Finance, which led the drafting process over two years, defended the reform as fiscally responsible and designed to expand the tax base while supporting national development. “This law was not prepared in haste,” said ministry official Fekadu Horeta during the hearing. “But we cannot raise the threshold beyond this without compromising government revenues.”

Still, unions and civil society groups contended the revision is too modest to make a meaningful difference. Kassahun argued that the proposal treats salaried workers as if they were profit-making enterprises. “An enterprise pays 35% tax on profit. But a worker pays 35% on what they consume,” he said.

He said many workers earning 5,000 birr a month are expected to pay rent, buy food, afford clothing, and seek medical care, all while paying taxes. “Some workers now skip meals. Others forgo treatment or sleep on balconies because their wages don’t cover rent,” Kassahun said during the discussion. “How can someone eat three times a day under such conditions?”

The government said the broader reform aims to raise Ethiopia’s tax-to-GDP ratio, one of the lowest globally, and to boost domestic revenue collection as it restructures $3.5 billion in bilateral debt under the G20 Common Framework.