Ethiopia: Proper Tax Collection Mechanism Needed Among Regional and Federal States, Says Expert

Addis Ababa — Proper mechanism is needed among regional and federal tax administrators to further enhance tax collecting and ensure the fair distribution of resources, scholars said.

Presenting "Fiscal Federalism in Ethiopia: Policies, Laws, Challenges and Solutions" on the High-Level International Conference on Taxation, Associate Professor Solomon Negussie said "all regional governments do not have one and the same problem with regard to tax collection."

Human resource, technology, investment attraction, and institutional arrangement within the tax administration are among the problems faced by regional governments, he pointed out.

Having said that, Solomon articulated "they [regional tax administrations] may be easily susceptible for corrupted parties."

Stating that not more than four regions cover 30 percent of their budget from tax, the Associate Professor noted "but it does not mean that they have efficiently collected."

"There is no proper mechanism which governs the federal and regional tax collection relationship even though they are trying to have that relationship, through federal state collaboration," he explained.

Moreover, he stressed that there should be proper mechanism and collaboration between the federal and regional tax collection.

There are regions that collect less than 10 percent of their budget, Solomon said, and suggested that unless decisive measures are taken in time regions might tend to claim that there is no fair resource distribution.

Organizer of the conference, Professor Fisseha-Tsion Mengistu said "most of the tax measures taken in Africa are not research based."

Noting that Ethiopia is a country with about 70 billion birr deficit and spends 65 percent of its public budget on procurement, Professor Fisseha-Tsion "it is time to re-think about our taxation system."

He urged both the government and taxpaying community to work hand in hand towards alleviating the hurdles and improving the entire system.

Ethiopia's tax-to-GDP of the 2010 Ethiopian Fiscal Year stands at 10.7 percent which is lower than the 16 percent average of Sub-Saharan African countries.

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