Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY)

Moges Mengstu Kassaw

doi:doi:10.11648/j.scidev.20230401.12

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Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY)

Moges Mengstu Kassaw

Published in Science Development (Volume 4, Issue 1)

Received: 10 November 2022 Accepted: 31 January 2023 Published: 21 February 2023

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Abstract

The objective of this study was to evaluate the effects of tax policy reforms on revenue generation in Ethiopia, using different tax revenue sources as a proxy for the federally collected tax revenue. To carry out this exercise, quarterly time-series data for the years (2005 - 2013 EFY) was employed. Data were gathered from both primary and secondary sources. Primary data was collected through interviews with relevant Ministry officials and experts from selected departments, and secondary data was gathered from performance reports of the Ministry. The analysis showed that the reform of the tax policy since the 2009 fiscal year has not had a positive impact on tax revenue. The tax authority's eight-year tax collection efficiency was assessed by the tax buoyancy, which was 0.76 percent between 2005 and 2012, the tax buoyancy rate was 0.9 before the tax policy reform, and 0.6 after the reform. This shows that tax collection is low after the policy reform and that the tax policy reform has an impact on revenue collection. The regression result showed that reform in Value Added Tax and Excise tax has a significant positive effect on revenue collection within the period under review; while reform in non-tax recorded a negative and insignificant effect on revenue collection. The Johansen cointegration test showed that a long-run meaningful relationship exists between tax reform and revenue collection (TR) in Ethiopia. To encourage taxpayers to comply with the law, the study suggests that the tax system should be reviewed on a regular basis, and that tax policy formulation should be carried out after proper consultation with all executives and relevant stakeholders.

Published in	Science Development (Volume 4, Issue 1)
DOI	10.11648/j.scidev.20230401.12
Page(s)	12-19
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2023. Published by Science Publishing Group

Keywords

Tax Policy, Tax Reform, Buoyancy, Cointegration, Ethiopia

References

[1]	Alemayehu G. & Abebe S. (2005). Tax and Tax reform in Ethiopia, 1990-2003. World institute for development economic research. United Nation University.
[2]	Azubike, J. U. (2009). Challenges of Tax Authorities, Tax Payers in the Management of Tax Reform Processes. Nigeria Account, 36-42.
[3]	Chole, E. (1987). Income Taxation in Pre - and Post- Revolutionary Ethiopia: A Comparative Review. Ethiopian Journal of Developmental Research, Vol. 9, Number 1.
[4]	Daba, D., & Mishra, DK. (2014). Tax reforms and tax revenues performance in Ethiopia. Journal of Economics and Sustainable Development, 11-19.
[5]	Ebieri, J. &. (2016). Assessment of the impact of tax reforms on economic growth in Nigerria.
[6]	FDRE. (2016). Federal Tax Administration Proclamation No. 983. Addis Ababa: Federal Negarit Gazette.
[7]	FDRE-HPR. (2002). Excise Tax Proclamation No. 307. Addis Ababa: Federal Negarit Gazette.
[8]	FDRE-HPR. (2019). VAT Proclamation No. 1157. Addis Ababa: Federal Negarit Gazette.
[9]	FDRE-HPR. (2020). Excise Tax Proclamation No. 1186. Addis Abeba: Federal Negarit Gazette.
[10]	Kotut, C. S., and Menjo, K. I., (2012). Elasticity and Buoyancy of Tax Components and Tax Systems in Kenya. Research Journal of Finance and Accounting, Vol. 3 (5), 118 -123.
[11]	Ogbonna, G. N., & Ebimobowei, A. (2012). Impact of tax reforms and economic growth of Nigeria: A time series analysis. Journal of Accounting and Financial Management, 15 - 28.
[12]	Pankhurst, R. (1966). State and Land in Ethiopian History. Addis Ababa: The Institute of Ethiopian Studies and the Faculty of Law, HSIU, pp. 176-179.
[13]	Pesaran, et. al. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 291–322.
[14]	Sjafri, Rika S. 2006. Analysis of tax revenues As a Function from Product Domestic GrossRelation to Tax Buoyancy and ElasticityTaxes in Indonesia. Thesis.
[15]	Tanchev, Stoyan & Filipova, Milena (2021). TAX BUOYANCY AND TAX ELASTICITY OF THE PROPORTIONAL INCOME TAX IN BULGARIA.

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Moges Mengstu Kassaw. (2023). Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY). Science Development, 4(1), 12-19. https://doi.org/10.11648/j.scidev.20230401.12

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Moges Mengstu Kassaw. Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY). Sci. Dev. 2023, 4(1), 12-19. doi: 10.11648/j.scidev.20230401.12

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AMA Style

Moges Mengstu Kassaw. Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY). Sci Dev. 2023;4(1):12-19. doi: 10.11648/j.scidev.20230401.12

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@article{10.11648/j.scidev.20230401.12,
  author = {Moges Mengstu Kassaw},
  title = {Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY)},
  journal = {Science Development},
  volume = {4},
  number = {1},
  pages = {12-19},
  doi = {10.11648/j.scidev.20230401.12},
  url = {https://doi.org/10.11648/j.scidev.20230401.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.scidev.20230401.12},
  abstract = {The objective of this study was to evaluate the effects of tax policy reforms on revenue generation in Ethiopia, using different tax revenue sources as a proxy for the federally collected tax revenue. To carry out this exercise, quarterly time-series data for the years (2005 - 2013 EFY) was employed. Data were gathered from both primary and secondary sources. Primary data was collected through interviews with relevant Ministry officials and experts from selected departments, and secondary data was gathered from performance reports of the Ministry. The analysis showed that the reform of the tax policy since the 2009 fiscal year has not had a positive impact on tax revenue. The tax authority's eight-year tax collection efficiency was assessed by the tax buoyancy, which was 0.76 percent between 2005 and 2012, the tax buoyancy rate was 0.9 before the tax policy reform, and 0.6 after the reform. This shows that tax collection is low after the policy reform and that the tax policy reform has an impact on revenue collection. The regression result showed that reform in Value Added Tax and Excise tax has a significant positive effect on revenue collection within the period under review; while reform in non-tax recorded a negative and insignificant effect on revenue collection. The Johansen cointegration test showed that a long-run meaningful relationship exists between tax reform and revenue collection (TR) in Ethiopia. To encourage taxpayers to comply with the law, the study suggests that the tax system should be reviewed on a regular basis, and that tax policy formulation should be carried out after proper consultation with all executives and relevant stakeholders.},
 year = {2023}
}

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TY  - JOUR
T1  - Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY)
AU  - Moges Mengstu Kassaw
Y1  - 2023/02/21
PY  - 2023
N1  - https://doi.org/10.11648/j.scidev.20230401.12
DO  - 10.11648/j.scidev.20230401.12
T2  - Science Development
JF  - Science Development
JO  - Science Development
SP  - 12
EP  - 19
PB  - Science Publishing Group
SN  - 2994-7154
UR  - https://doi.org/10.11648/j.scidev.20230401.12
AB  - The objective of this study was to evaluate the effects of tax policy reforms on revenue generation in Ethiopia, using different tax revenue sources as a proxy for the federally collected tax revenue. To carry out this exercise, quarterly time-series data for the years (2005 - 2013 EFY) was employed. Data were gathered from both primary and secondary sources. Primary data was collected through interviews with relevant Ministry officials and experts from selected departments, and secondary data was gathered from performance reports of the Ministry. The analysis showed that the reform of the tax policy since the 2009 fiscal year has not had a positive impact on tax revenue. The tax authority's eight-year tax collection efficiency was assessed by the tax buoyancy, which was 0.76 percent between 2005 and 2012, the tax buoyancy rate was 0.9 before the tax policy reform, and 0.6 after the reform. This shows that tax collection is low after the policy reform and that the tax policy reform has an impact on revenue collection. The regression result showed that reform in Value Added Tax and Excise tax has a significant positive effect on revenue collection within the period under review; while reform in non-tax recorded a negative and insignificant effect on revenue collection. The Johansen cointegration test showed that a long-run meaningful relationship exists between tax reform and revenue collection (TR) in Ethiopia. To encourage taxpayers to comply with the law, the study suggests that the tax system should be reviewed on a regular basis, and that tax policy formulation should be carried out after proper consultation with all executives and relevant stakeholders.
VL  - 4
IS  - 1
ER  -

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Author Information

Moges Mengstu Kassaw

Department of Development Economics, Ethiopian Civil Service University, Addis Ababa, Ethiopia

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Plain Text BibTeX RIS

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Moges Mengstu Kassaw. (2023). Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY). Science Development, 4(1), 12-19. https://doi.org/10.11648/j.scidev.20230401.12

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ACS Style

Moges Mengstu Kassaw. Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY). Sci. Dev. 2023, 4(1), 12-19. doi: 10.11648/j.scidev.20230401.12

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AMA Style

Moges Mengstu Kassaw. Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY). Sci Dev. 2023;4(1):12-19. doi: 10.11648/j.scidev.20230401.12

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@article{10.11648/j.scidev.20230401.12,
  author = {Moges Mengstu Kassaw},
  title = {Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY)},
  journal = {Science Development},
  volume = {4},
  number = {1},
  pages = {12-19},
  doi = {10.11648/j.scidev.20230401.12},
  url = {https://doi.org/10.11648/j.scidev.20230401.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.scidev.20230401.12},
  abstract = {The objective of this study was to evaluate the effects of tax policy reforms on revenue generation in Ethiopia, using different tax revenue sources as a proxy for the federally collected tax revenue. To carry out this exercise, quarterly time-series data for the years (2005 - 2013 EFY) was employed. Data were gathered from both primary and secondary sources. Primary data was collected through interviews with relevant Ministry officials and experts from selected departments, and secondary data was gathered from performance reports of the Ministry. The analysis showed that the reform of the tax policy since the 2009 fiscal year has not had a positive impact on tax revenue. The tax authority's eight-year tax collection efficiency was assessed by the tax buoyancy, which was 0.76 percent between 2005 and 2012, the tax buoyancy rate was 0.9 before the tax policy reform, and 0.6 after the reform. This shows that tax collection is low after the policy reform and that the tax policy reform has an impact on revenue collection. The regression result showed that reform in Value Added Tax and Excise tax has a significant positive effect on revenue collection within the period under review; while reform in non-tax recorded a negative and insignificant effect on revenue collection. The Johansen cointegration test showed that a long-run meaningful relationship exists between tax reform and revenue collection (TR) in Ethiopia. To encourage taxpayers to comply with the law, the study suggests that the tax system should be reviewed on a regular basis, and that tax policy formulation should be carried out after proper consultation with all executives and relevant stakeholders.},
 year = {2023}
}

Copy | Download

TY  - JOUR
T1  - Tax Reform and Tax Revenue Collection Performance in Ethiopia (From 2005 to 2013 EFY)
AU  - Moges Mengstu Kassaw
Y1  - 2023/02/21
PY  - 2023
N1  - https://doi.org/10.11648/j.scidev.20230401.12
DO  - 10.11648/j.scidev.20230401.12
T2  - Science Development
JF  - Science Development
JO  - Science Development
SP  - 12
EP  - 19
PB  - Science Publishing Group
SN  - 2994-7154
UR  - https://doi.org/10.11648/j.scidev.20230401.12
AB  - The objective of this study was to evaluate the effects of tax policy reforms on revenue generation in Ethiopia, using different tax revenue sources as a proxy for the federally collected tax revenue. To carry out this exercise, quarterly time-series data for the years (2005 - 2013 EFY) was employed. Data were gathered from both primary and secondary sources. Primary data was collected through interviews with relevant Ministry officials and experts from selected departments, and secondary data was gathered from performance reports of the Ministry. The analysis showed that the reform of the tax policy since the 2009 fiscal year has not had a positive impact on tax revenue. The tax authority's eight-year tax collection efficiency was assessed by the tax buoyancy, which was 0.76 percent between 2005 and 2012, the tax buoyancy rate was 0.9 before the tax policy reform, and 0.6 after the reform. This shows that tax collection is low after the policy reform and that the tax policy reform has an impact on revenue collection. The regression result showed that reform in Value Added Tax and Excise tax has a significant positive effect on revenue collection within the period under review; while reform in non-tax recorded a negative and insignificant effect on revenue collection. The Johansen cointegration test showed that a long-run meaningful relationship exists between tax reform and revenue collection (TR) in Ethiopia. To encourage taxpayers to comply with the law, the study suggests that the tax system should be reviewed on a regular basis, and that tax policy formulation should be carried out after proper consultation with all executives and relevant stakeholders.
VL  - 4
IS  - 1
ER  -

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