Chole, Eshetu (PhD)Midekssa, Mesfin2021-11-262023-11-042021-11-262023-11-041994-06http://etd.aau.edu.et/handle/123456789/28978Ethiopia is currently i mp lement i ng a s ructura l adjustmen . program. The program part l y deals wi th reduci ng the overall fis cal deficit. Tariff reform is one aspect of the package of trade pol i cy measures env i saged . Tar i ff reform a i ms at lower ing the average tariff rate in order to cease dis crim i nation against private sector imports and at rationalizing the protect i ve s ystem . However, since tariff reduct i on is undertaken during a per iod of structura l adjustment , the potential loss of tax revenue from lowering tariff rates is an i mportant issue which needs special consideration . The major objectives of this study are to estimate the effect of changes in the import tax system on total tax revenue and on other key macroeconomic variables, and to forecast the future tax revenue due to a recent (1993) system change in the import taxation. The main findings are that due to a recent tariff reduction, i mport tax and total tax revenue will decline in the future . This reduction in tax revenue, ceteris paribus , will in turn increase the overall fiscal deficit. Revenue losses arising from tariff reduction must be compensated by other sources of tax revenue . In th i s case, the re commended measures to offset the loss are , moving the exempted items to lower tariff rates , broadening the domestic t ax base (particu l ary introducing a single stage sales tax on goods previously exempted from domesti c tax payment ) and improv ing administrative capability to el i minate evasion.enBudgetary ImpactThesis