Addis Fortune (Addis Ababa)

Ethiopia: Tax Revenue Edges Closer to Targets, As Authority Cracks Down On Contraband

High employee turnover, low level of cash register machine use and poor overdue tax collection continue to hamper ambitions

The Ethiopian Revenue & Customs Authority (ERCA) has collected 79 billion Br in revenue over the last nine months, falling short of a target of 88.3 billion. This was according to its nine-month performance report, released on Monday, May 12, 2014.

The Authority's revenue collection projection for the current fiscal year is 16.7 billion Br higher than that collected during the 2012/13 fiscal year - an increase of 27pc. Addis Abeba contributed 10.7 billion Br to the nine-month collection, which is 13.5pc of the total revenue.

From the total amount of 79 billion Br, 34.5 million Br, or 43.5pc, of it was obtained from export taxation. Indirect tax contributed 56.3 billion Br, or 72.3pc. The remaining 21.5 billion came from direct tax.

The authority also reported that it has prevented 23.4 million Br worth of commodities from being smuggled out of the country. This figure shows an 8.1 million Br improvement from last year's performance. These commodities include livestock, khat, coffee, gold, silver, cereals, vegetables and fruits. Livestock alone was estimated to be worth 11.34 million Br. Most of the smuggling, amounting to 14.3 million Br, was stopped at the Bahir Dar checkpoint.

The smuggling of home goods, including such items as garments, electronics, foods, cigarettes, cosmetics and drugs, was worth a hefty 314 million Br.

The Hawassa Branch office of the ERCA intercepted the largest proportion: 64.87 million Br worth of contraband. Garments, new and used, also had the greater share among the commodities, at 147 million Br. The total sum has decreased by 17.3 million Br from the previous year, the report said.

The ERCA also reported hiring 2,046 new employees during the last three quarters, during which time 1,502 have quit the company. Of the 122 employees the ERCA fired, 61 were made to leave because of corruption.

Cash register machine use was intended to reach 37,440, but only 19,452 tax payers are using the machines. The Authority has thus failed to attain its goal by almost 50pc.

The Authority also sued 2,949 individuals for tax fraud and contraband. Eighty-five percent of the criminal cases and 97.25pc of civil cases were ruled in its favour, the report said.

The report listed high employee turnover, poor level of cash register machine use by businesses and low performance in the collection of overdue taxes as reasons why the Authority did not achieve its target.

According to the Growth & Transformation Plan (GTP), by the end of 2015 total revenue and tax revenue contribution to the country's economy will reach 17pc and 15pc, respectively.

Despite only collecting 84.2 billion Br during the last fiscal year, the ERCA plans to collect 116.7 billion Br in 2013/14. The ERCA has managed to expand its revenue collection from 19 billion Br, in 2008, to 84.2 billion Br in the 2012/13 fiscal year.

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