Mobilization of Resources through Taxation in Ethiopia

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Addis Ababa University


The task of mobi l i zing r esources f or publ ic sector outlays iB a maJor conce rn of e conoml C policy ln Ethi opia. This is es pec i ally t r ue l n postr evolution Ethiopi a , wher e t he soc i c-pol it i cal changes that have taken place have have caused the nat i on t o r e l y heavily on the public sector f or i t s social and economic devel opments . Taxati on i s the pri mary means of mobil izing r esour ces in the country . A str ong tax per f ormance is thus an indispensable condit i on i nor der for t he gove r nment to s t ep up its devel opment expenditur es . The ob j ective of thi s study was to ascer tai n the compat i bili ty of the t ax sys t em wi t h the goal of resource mobili zation. Towards this end the structure of t he t ax r evenue was analysed and its impact on the r evenue r alslng capabili ty of the tax system examined . Mor eover , t he magnitude of t he t f:l.X r evenue r a i sed ,vas eval uated by compar ing it with the t axabl e capacity of t he count ry , and r evenue needs of the gover nment . Final ly~ the t ax effort made l n the past was assessed, and the ~otent i ali ty of the t ax system t o mobi l i ze an increasing share of the nati onal lncome ln the f ut ur e examined. The outcome of the study indicat ed that despite the inc r eased efforts made t o i mpr ove the effectiveness (If the tax system, tax revenue l n Ethi opi a r emalns i nadequate (skimp) , unstable; and in f l exible . The cause of such anomal ous conditions wer e attributed to among others , faulty t ax ploi cy , and weakness i n impliment at i on of the tax laws . It was suggested that a synchronized action both at pol icy and executi on as pect of the taxation pr ocess can impr ove the pe r fo r mance of the t ax system .



Mobilization of Resources