Mobilization of Resources through Taxation in Ethiopia
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Date
1985-06
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Addis Ababa University
Abstract
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 .
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Keywords
Mobilization of Resources