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Addis Ababa University Libraries Electronic Thesis and Dissertations: AAU-ETD! >
Institute of Regional and Local Development >
Thesis - Regional and Local Development >
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http://hdl.handle.net/123456789/911
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| Title: | TAX ASSIGNMENT TO SUBNATIONAL GOVERNMENTS IN A DECENTRALIZED FISCAL SYSTEM OF ETHIOPIA |
| Authors: | Mergia, Tesfaye |
| Advisors: | Abebe Yitayew(Assistant Professor) |
| Keywords: | Decentralization
subnational
fiscal
tax and assignment |
| Copyright: | 2005 |
| Date Added: | 23-Apr-2008 |
| Publisher: | Addis Ababa University |
| Abstract: | Fiscal decentralization is one dimension of decentralization, which refers to the devolution of
fiscal resources and fiscal decision-making power by the central government to subnational
governments. Ethiopia has developed and defined constitutional and legal provisions to
support fiscal decentralization and strengthening of decentralized levels of government. The
design of fiscal decentralization is based on four pillars, of which tax assignment is the
emphasis of this research paper.
The study is based on more of descriptive analysis. In addition to secondary data, primary
data produced through interviews and discussions with officials of different levels of
government were utilized in the study.
The findings indicate that, due to the assignment of very weak tax bases to regional states,
their financing capacity is very low. This, in turn, has made regional states highly dependent
on the central government for the larger part of their expenditure, which may pose a
challenge to the realization of economic efficiency, responsiveness and accountability.
Inefficiencies in tax collection and administration have some bearing on the lower financing
capacity of the regions. The grant distribution formula also is not encouraging for better
revenue effort. Furthermore, though it has been said that the decentralization process is
broadened and deepened to woredas, which are considered to be centers of socio-economic
development, experiences of SNNP and Oromia regions revealed that currently they control
only the expenditure side (through block grants) of their fiscal resources. Still woredas have
not been empowered to control their own revenue sources.
To enhance economic efficiency, responsiveness and accountability it would be advantageous
to take measures in such a way that can raise revenue effort of the regions. The measures
should include assigning adequate bases, allowing regional states to have discretion on ‘own
source’ taxes, and designing transfer formula in a way that encourages regions to develop
their own source revenue. Deepening the decentralization process also requires giving
woredas control of appropriate taxes. In relation to this user fees and charges, rural land use
fee, agricultural income tax and personal income tax are recommended as appropriate
sources of revenues for woredas. |
| Description: | A Thesis Submitted to the School of Graduate Studies of Addis Ababa University In Partial Fulfillment of the Requirements for the Degree of Master of Arts in Regional and Local Development Studies |
| URI: | http://hdl.handle.net/123456789/911 |
| Appears in: | Thesis - Regional and Local Development
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