Tax Reforms and Tax Revenues Performance in Ethiopia
| Title | Tax Reforms and Tax Revenues Performance in Ethiopia |
| Publication Type | Journal Article |
| Year of Publication | 2014 |
| Authors | Daba, D, Mishra, DK |
| Journal | Journal of Economics and Sustainable Development |
| Volume | 5 |
| ISSN | 2222-1700 |
| Keywords | and performance, Tax reforms, Tax revenues |
| Abstract | One of the main objectives of the Ethiopian tax reforms was to generate adequate tax revenues to finance ever
increasing public expenditure on poverty alleviation and development projects. This would be achieved through
streamlining of the tax system to mobilize tax revenues from national economic growth. The purpose of this
article is to analyze and compare tax revenues performancesof the two governments in power in Ethiopia during
the last 39 years.Descriptive analysis is used to compare different categories of tax performance of the Derg and
Ethiopian People’s Revolutionary Democratic Front(EPRDF) regimes. In public finance important measures that
have been used to assess the responsiveness of a tax system in terms of tax revenues mobilization is tax to GDP
ratio. In light of this major tax categoriesof tax to GDP and total tax revenuesratios over the period of 1974/75 to
1912/13 (39 years) were computed and analyzed. In addition comparison has been made between pre and posttax
reforms to compare tax system flexibility in terms of raising tax revenues during the EPRDF regime. The
period after 2002/03 was considered as post comprehensive tax reforms years. The result shows that the
comparison of two governments’ different categories of tax ratios shows a slight increment from an average 3.77
percent to 9.95 during EPRDF period. Comparing pre and post-tax reforms during the period 1991/92 to 2012/13
the ratios of different category tax revenues show insignificant change for post comprehensive tax reform period.
Comparing direct versus indirect tax categories, direct tax shows the tendency of declining contrary to the
comprehensive tax reform main objective which gave due attention to increase the share of the direct tax to total
revenues. The overall analysis reveals that tax reforms failed to boost total tax revenues and to bring tax structure
change from indirect tax to direct tax.
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