Eritrea’s Response to the SEMG, 2014
The 2% Recovery and Rehabilitation Tax (RRT)
Eritrea wants to underline that the levying of various taxes is surely the prerogative and sovereign right of any country and an exclusive matter that concerns its citizens. Moreover, the UN Security Council Resolution 2023 (2011) does not prevent Eritrea from collecting Recovery and Rehabilitation Tax (RRT).
The RRT is part and parcel of Eritrea’s taxation law and system. It has its own evolution and history. Historically, Eritreans in all walks of life voluntarily contributed to the national cause during the 30-year armed struggle for independence and self-determination. This was at a time when the international community had largely ignored the inalienable national rights for self-determination and the predicaments of the Eritrean people. In those years, Eritreans abroad came together in civil society associations organized along professional, occupational, and gender dimensions to raise funds in support of relief and developmental work in the liberated areas and to conduct public awareness campaigns. The magnitude of their contributions varied from place to place and with time. Generally, monthly contributions from members of the associations of Eritrean students hovered around 10% while that of Eritrean women and workers reached 20% of their gross income. This voluntary financial contribution was not only vital in terms of mitigating the humanitarian consequences of the protracted war for independence, but it was indispensable in reinforcing the bond between the Diaspora and their compatriots at home.
After Eritrea’s independence in 1991, the nascent government faced enormous economic challenges and hurdles. In addition to devastated infrastructure and economy, the GOE had to address an onerous social burden for the upkeep of the families of martyrs and the disabled; over 60,000 martyrs and over 10,000 war disabled. The GOE allocated a monthly payment of 500 Nakfa (birr at the time) for families of martyrs that is payable for a lifetime to the parents while limited until the age of 18 years for minor dependents and siblings of the martyrs. All war-disabled fighters that could not be fully rehabilitated with employable skills are also beneficiaries for monthly payments. The demobilization programme was another major project implemented in 1994 largely through government funds.
Under these circumstances, many citizens in the Diaspora launched spontaneous and voluntary but fragmented initiatives, to raise funds for the above-mentioned noble and humanitarian causes, therefore, it became essential and necessary to institutionalize those initiatives. Eritreans residing abroad discussed the matter on the bases of their experience during the 30-year struggle for independence. The overriding desire was to imbue some structure and uniformity to what was effectively a burgeoning spontaneous and voluntary grassroots movement. Subsequently with clear objective of funding countries’ social and development programs, in 1994, the Eritrean National Assembly enacted the Rehabilitation and Recovery Tax Proclamation (RRT). The RRT Proclamation specifically targets only Eritrean citizens in the Diaspora, not citizens of other countries of Eritrean descent. The rate was fixed at a low of 2% of net income; in a country where personal income tax is progressive and reaches 38%.
The Rehabilitation and Recovery Tax was envisaged as a time-bound provision that would wind up at some time in the near future as the economy of the new country grows and the social responsibility and burdens eases. This was underlined during the discussions at the Eritrean National Assembly, although it was not articulated in the form of a definitive sunset clause at the time of its proclamation. However, subsequent developments, and notably the border war instigated by Ethiopia in 1998 and its sequel, have made revision of the RRT Proclamation practically impossible. It must be underlined that the border war between Eritrea and Ethiopia (1998-2000) had cost the life of 19,000 Eritreans and has created additional martyrs’ families.
The legality of the RRT is unambiguous, and purposes laudable. It represents a symbolic burden shared by the Eritreans in Diaspora with the people inside the country. In this sense, its historical, moral, humanitarian and patriotic contents and values are more significant and profound than its material dividend. In fact, the funds collected annually are modest that should not be overstated when compared with the government budget and expenditure on basic social services. For the last four years, for instance, the aggregate RRT collected annually vary from a total of 14.8 million US dollars in 2010 to 24.7 million US dollars in 2013. In those four years, the aggregate RRT collected did not exceed 73 Million US dollars, while budgetary appropriation by the Government for the family of martyrs and war-disabled individuals for the same period hovers around 28 million US dollars annually, which is almost 112 million US dollars for the four year period.
The distorted allegations that the GOE employs “extortion, threats of violence, fraud and other illicit means” to collect the RRT is utterly baseless. It is a deliberate misinformation aimed at creating misperception about the active and voluntary participation of the Eritreans in the Diaspora in the affairs and development of their country. The GOE has neither the means nor the desire to enforce the RRT proclamation through extra-legal means. As is the case in all countries, Eritrea has specific clauses on the rights and obligations of citizens concerning taxation. Regarding the RRT, there are explicit enforcement measures implemented domestically such as “denial of business license and land entitlements to those who fail to meet their fiscal obligation”. These measures are not and cannot be implemented extraterritorial. They do not also curtail the natural right of Eritrean citizens to visit their home country or relatives so long as they are holders of Eritrean national identity cards or passports. They don’t need a visa to enter Eritrea. Furthermore, as it is propagated in some quarters and is frequently echoed in the reports of the SEMG, there are no “harassments against their families living in the country”.
Another misperception is that the “UN Security Council Resolution 2023 (2011) prevents Eritrea from collecting the RRT”. No provision in the stated resolutions prevents Eritrea from levying a 2% tax on Eritreans residing abroad. The measures imposed by some countries, under the pretext of implementing the UN Security Council Resolution are incorrect and constitute at best, a misinterpretation of the Resolution. In fact, it is incumbent on the Security Council as well as the SEMG to alert the member countries when their actions in implementing the UNSC resolutions are not consistent with the provisions of the resolution.
Given the fact that the African Diaspora is recognized as the Sixth Region of Africa by the Head of States of the African Union (AU) and the establishment of African Remittance Institute becoming a reality, Eritrea which has effectively and productively involved and utilized its Diaspora community in its 30-Year war for independence and 24-years national economic development must be commended and emulated, not punished and obstructed.