Tax Reform Program in Ethiopia

Course ID
Ethiopian Economics Association (EEA)
Fantahun Belew


The principal objective of taxation is to mobilize sufficient revenue to meet the ever-growing needs of government expenditure. In addition to raising revenue, taxes have other objectives, including redistribution of income and wealth, and discouraging to follow the principles of efficiency, famines and administrative feasibility. In this paper am attempt is made to review and evaluate the existing system of taxation and the reform measure in Ethiopia in terms of the specified objectives. The level of tax revenue of the country is traditionally measures relative to its gross domestic product (GDP). In this connection, \Ethiopia’s tax revenue against its GDP remained low as empirical evidences show. Such low level of tax revenue is certainly the outcome of the prevailing poor tax revenue mobilization mechanism, be it a matter of policy or administration. The low tax – GDP ratio, however, indicates the existence of modest tax burden and the room to raise more revenue. There is opportunity to increase revenue without affecting the saving, investment and production incentive of the private sector. This paper tries to identify such possibilities and suggests a number of alternatives as to how to build a more sound tax system in Ethiopia. Largely, to enhance domestic resource mobilization effect, it is essential to design a tax system which enables the government to raise more revenue as the economy grows. This may be made possible if the tax policy focuses on the taxation of growing economic sectors, taxation of income and profit, incorporation of progressive tax rates, taxation of consumption goods with high-income elasticity of demand.

Corporate Author: Gebrehiwot Ageba, Jemal Mohammed and Solomon Tesfay (Editors) , Ethiopian Economic Association(EEA) , Department of Economics of AAU & Fredrich Ebert Stifung
Publisher:Ethiopian Economic Association (EEA)
Primary Descriptors: Taxation; taxation programme

Secondary Descriptor: Tax administration and procedure

Geographic Descriptors: Ethiopia
Cataloge Date: 02/27/2013
Broad Subject heading: Tax System
Call Number: 338.963 PRO 2002
Serial Key Title: Proceedings of the Eleventh Annual conference on the Ethiopian economy
Publication catagory: Annual conference
Content type:EEA Publication
Publication date:2013-12-27 00:00:00
Forum or Discussion date:2013-02-27 00:00:00
Conference Place:Nov. 2-4, 2001, Nazareth, Ethiopia
PDF file: Fantahun Belew_Tax reform program in Ethiopia.pdf
Place of publication: Addis Ababa, Ethiopia
Type of material:Book
Current frequency: Annualy
Thematic area:Policy Reform, Implementation and outcome in Ethiopia
Author: Fantahun Belew

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