At the end of the just ended fiscal year, Ethiopia’s parliament approved ETB320 billion budget for 2017/18 fiscal year. The Ethiopian Revenue and Customs Authority (ERCA) also planned to collect ETB199 billion in the year, 62Pct of the approved budget. The tax collection in the preceding year was ETB160 billion. The Authority has been working to increase the tax-to-gross domestic-product (GDP) ratio from 13Pct currently to 17Pct in 2020.
However, the recent effort to increase tax collection, thereby improve the tax-to-GDP ratio, by collecting more taxes ended up being controversial. Tax payers repeatedly voice their frustrations in high sales assessment which implies exaggerated tax amount to be required. Experts also challenge the way the government tries to boost domestic resource mobilisation because efforts to create an enabling business climate for small and informal businesses to go formal and contribute more to the national development endeavour remains minimum. EBR’s Samson Hailu explores the issue to offer this report.