Eritrean Farmers Subjected to Land Lease in the Name of Farm Income Tax Regime
By Teweldeberhan Gebre
On 2 December 2016, the Government of Eritrea (GoE) issued a proclamation, Proclamation No. 178/2016 on farm income and livestock taxation (ግብሪ ካብ ኣታዊ ሕርሻ ገጠርን እንስሳ ዘቤትን), that replaced Proclamation No. 63/1994. The proclamation has entered into force on 1 December 2016. Issuing numerous legal notices, decrees, orders, and proclamations are things national and sub-national authorities can do to manage their affairs when they are in government.
In the case of Eritrea, there is no such mechanism to scrutinize any legal bills issued by the executive branch of government because there is no functional legislative body with a constitutionally vested power to make laws, to alter or completely repeal them. In the absence of a legislature, legal bills issued by the executive branch of government may be subject to inconsistencies and controversies because of the lack of proper inquiry and scrutiny. Proclamation No. 178/2016 on farm income and livestock taxation is an example of these contradictions and controversies although not an exceptional in the Eritrean legal landscape.
According to the Land Proclamation No. 58/94 Article 4 (1) “[e]very Eritrean citizen shall have a usufruct right over land.” In this land proclamation of Eritrea, there is no reference for ‘agricultural usufructuary lease’ or ‘lease’ for Eritrean citizens while referencing on land lease for foreigners was made under Article 8 of the land proclamation. According to the Land Proclamation, every citizen is granted a usufructuary right on land for a lifetime to use, make improvements and enjoy its fruits although citizens are not allowed to sell and donate lands allocated to them. Moreover, according to Article 27 of the land proclamation, an Eritrean citizen can lease his/her usufructuary rights over land in whole or in part in which case the “lease duration and rent shall be determined by an agreement to be made between the parties.” Given the historically common landholding system in most parts of Eritrea calling ‘the state owns land’ does not make a difference as long as citizens are indiscriminately entitled to usufructuary rights over land including its improvements and enjoining its fruits.
Proclamation No. 178/2016 Violates the Land Proclamation
Proclamation No. 178/2016 on ‘farm income’ and livestock taxation apart from the provisions for the livestock tax violates the provisions in the Land Proclamation No. 58/94, specifically, it violates Article 4 (1) “[e]very Eritrean citizen shall have a usufruct right over land.” Fundamentally, Proclamation No. 178/2016 is not about levying a tax on agricultural incomes but a new land lease system systematically imposed on subsistence farmers. It is an act of taking back farmers lifetime usufructuary rights on land provided by the Land Proclamation of 58/94 without legally repealing the land proclamation Article 4 (1). Taxing farmers based on their farm incomes and imposing lease/land tax based on the numbers of hectares apportioned to them are entirely different things. Hence, apart from the provisions for the livestock taxation, the title of the Proclamation No. 178/2016 “ግብሪ ካብ ኣታዊ ሕርሻ ገጠርን እንስሳ ዘቤትን ንምእካብ ዝወጸ ኣዋጅ” is not only flawed but also meant to introduce lease system into the conventional Eritrean farmers tacitly. While the short title of the proclamation says “Proclamation No. 178/2016 to Collect Tax from Farm Income and Livestock”, the truth is the government is tacitly introducing a usufructuary land lease system into the subsistence and commercial farming. There is no such thing called ‘farm income tax’ or anything similar in the new proclamation despite the title of the Proclamation. See below the Tigrigna versions of Articles 1 and 4 for yourself.
ዓንቀጽ 1 – ሓጺር ኣርእስቲ
እዚ ኣዋጅ’ዚ “ካብ ኣታዊ ሕርሻ ገጠርን እንስሳ ዘቤትን ግብሪ ንምእካብ ዝወጸ ኣዋጅ ቁጽሪ 178/2016”ተባሂሉ ክጥቀስ ይከኣል።
ዓንቀጽ 4 ኣገማምታን ኣከፋፍላን ግብሪ
ዝኾነ ሰብ ብውልቂ ወይ ብጉጅለ፦
- ልምዳዊ ሕርሻዊ ስርሓት ንምክያድ (መሬት) ዝተዋህቦ ዘለዎ ንነፍስ ወከፍ ሓደ ሄክታር 150 ናቕፋ (ሚእትን ሓምሳን ናቕፋ)
ዓመታዊ ኣታዊ ግብሪ መሬት ይኸፍል።
- ካብ ልምዳዊ ሕርሻዊ ስርሓት ወጻኢ ፍቓድ ንግዳዊ ሕርሻ ዘይተዋህቦ ግን ንግዳዊ ጠባይ ዘለዎ ሕርሻዊ ንጥፈታት ዘካይድ። ኣብ ልዕሊ ኣብዚ ዓንቀጽ’ዚ ንኡስ ዓንቀጽ ዝኽፈል ተወሳኺ ንነፍስ-ወከፍ ርብዒ ሄክታር 150 ናቕፋ (ሚእትን ሓምሳን ናቕፋ) ዓመታዊ ኣታዊ ግብሪ መሬት ይኸፍል።
Article 4 of Proclamation No. 178/2016 requires subsistence farmers and commercial farmers to pay, respectively, NFA 150 and NFA. 750 per hectare annually. This is not about collecting tax on farm income but land lease payments to the government as the owner of the land. Interestingly, as in Article 4 (1), the government accidentally admits that this is not a farm income tax but land tax (ግብሪ መሬት). The question is, why does the government call the proclamation, “Proclamation No. 178/2016 to Collect Tax from Farm Income and Livestock” while it is imposing a land lease system into the farming communities? Well, the answer is because the provisions of the new proclamation (Article 4(1&2) are in sharp contradictions with the provisions of the Land Proclamation, specifically Article 4(1) of the Land Proclamation that gives citizens a lifetime usufructuary rights over land.
Another difficulty with the new Proclamation is that the per hectare land lease price is the same (NFA 150/ha for subsistence farmers and NFA 750/ha for commercial farmers) across the nation. This means no due consideration was given to the differences in land fertility and productivity. The chance to reverse this systematic introduction of agricultural usufructuary land lease system across the whole farming communities is unmistakably impossible given the political culture of the ruling class. For God’s sake, let us accept this new land lease system, but the problem as I pointed out above goes beyond just imposing a new land lease system. The lease price per hectare is the same across all lands regardless the productivity or fertility of this and that plot of land. In other words, considering the productivity of the land, one hectare in Tessenei-Aligdir and elsewhere in Anseba region is not the same. Hence, imposing the same lease price across the country is not only unfair but also lacks the common sense of governing a nation’s wealth such as land.
Unless the government repeals its Land Proclamation No. 58/94, which entitles Eritreans for usufruct rights over land stated in Article 4 (1) “[e]very Eritrean citizen shall have a usufruct right over land,” the new Proclamation, Proclamation No. 178/2016 is not only illegal but also null and void.
While the Land Proclamation (No. 58/94) entitles every citizen for usufruct rights over land, the new Proclamation (No. 178/2016) robs that usufruct rights over land via silently introducing an agricultural usufructuary lease system. Guess what it applies only to farmers and doesn’t apply to commercial industrial, and residential premises. Why? Because they are owned by the PFDJ conglomerates and partly because it could annoy diaspora real estate owners.
In the new Proclamation, there is no such reference to farm income taxation but a land lease, and the per hectare lease price for subsistence farmers is NFA 150 and is the same across all regions of the nation. Interestingly, another weakness of the Proclamation is that it assumes all arable lands are equal in their productivity and soil fertility levels. I think this assumption is wrong. Applying the same per hectare lease price across the nation and plots of land by disregarding the nature and productivity aspects of agricultural farmlands is a lack of concern and disregards to the poor households who by chance acquired poor fertility and productivity lands.
In the end, the government is unfaithful to the people, particularly to the poor farmers and is desperate for tax revenues. Nevertheless, this measure cannot change the poor revenue collection situation unless the leadership is in complete loss of sense. The only way forward is to open the market for investment, tackle the narrow economy and diversify it to the point government revenue can finance its expenditures. Right now, the whole economy is in the hands of PFDJ companies which are not subjected to any tax regime whatsoever. If this doesn’t constitute a corruption, what else does?