CHAPTER ONE

INTRODUCTION
1.1 Back ground of the study
Though it was very difficult to get the reliable and documented evidence as to when exactly tax was
introduced, it is believed that history of Ethiopian taxation comes along with the establishment of
government. Taxation was the source of government revenue from early Aksum kingdom in Ethiopia
around 500 A.D (Misrak Tesfaye, 2008)

In these days the kind of taxation was entirely traditional and from their cattle and agricultural products
to the governors of the state. This traditional tax system continued for several centuries smoothly until it
was replaced by modern tax system in the mid of 20th century. Evidences indicate that in the third
quarter of 19th century, also taxes were paid in kind and in money (Misrak Tesfaye, 2008).

Taxes during third quarter of 19th century also consist of direct and indirect taxes. Direct taxes of the
period included, land taxes (gibr), tithe, Asrat, provincial administrative taxes, taxes for appointees,
appointment taxes on livestock and live stock products maintenance taxes on honey etc. During the
period of war peasants were asked to pay even more than two times a year. Indirect taxes during the
third quarter of 19th century consist, Toll taxes, caravan taxes, friedal (taxes on slaughter cattle) (Oromia
revenue bureaus, 2009).

During the fifties the share of tax revenue from government revenue averaged 88.8%, while the
corresponding figure for the tax revenue was 10.8%.During the sixties the contribution of tax to total
revenue varied between 86 and 91 percent. Through out the first three decade (1950-1979) the larger
part of Ethiopian government revenue was drawn from taxes on international trade transactios.Their
average contribution were 46% declined to 41%during the sixties and to 35%during seventies(Ashetu
Chole, 1994).

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Around the second quarter of 20 century modern tax system emerged. The statutory bases for all the
taxes proclamation during the period were the 1955-revised constitution of Ethiopia, the power being
given to the ministry of finance and article 34 and 38 were the most frequently cited one’s about tax
proclamation. Taxes during this period were income taxes, land use taxes, educational taxes, health
taxes, taxes based on transaction and etc.
Around the third quarter of20 century the system of feudal land tenure was abolition and the revoke of
land taxes and tithe the health and education taxes were also canceled and the remaining types of taxes
were extensively amended and restructured by derg and used until him tail of 1991 (Gebrei worku
mengasha,2008).
During the seventies and eighties the share of taxes in total revenue was declining. Thus while in the
seventies the average tax contribution to total tax revenue had been85.6%.Its share in eighties declined
to about 77.6%.During the eighties while the contribution of tax on international trade was significantly
surpassed by that of taxes on income. Their percentage contribution was equal to on those taxes on
domestic goods and services. In fact the share of domestic tax on goods and services with the slight up
and down in seventies was consistently rising from mid- fifties to mid-seventies reaching its maximum
level of 30% in 1974.During the eighties the contribution of domestic taxes on goods and services
covered around 22% (Ashetu chole, 1994).
During the transitional government of Ethiopia (1991-95) tax rates is modified. The major modification
and introduction were employment income tax by the rates of 10% to 85% ranges to 10% to 4o% and tax
rates of incorporate bodies reduced to 45% business income tax by range of 10% to 40% mining income
tax, capital gain tax, rental income tax, sales and excise tax import duties etc.

E. Taxesduring the federal democratic republic of Ethiopia.

The statutory bases for all tax laves during the recurrent period in Ethiopia are: the 1994 constitution of
Ethiopia and the power given to ministry of finance and economic development and also to the ministry
of revenue (Misrak Tesfaye, 2008)

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 Taxes in this period are divided in to direct taxes and indirect taxes. Direct taxes during this period
consists employment income tax, business income tax, rental income tax, taxes on other income which
included:-
 Tax an income from rental property
 Tax an dividend income
 Taxes an income from games of chance.
 Tax an interest income deposits on land use tax.
Indirect tax during the period included

 Value added tax (VAT)

 Turn over tax
 Excise tax and custom duties
(Misrak Tesfaye, 2008)

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 1.2 Statement of the Problem

Certain taxes (for instance excise duties) are often administered at the production level which
means that these states where the production of taxed goods is most benefited. Similarly, when
it comes to business income tax, since the location of forms and their network of regional plants
with in the federation could not be dictated by tax consideration and the attribution of taxable
income to the different plants is arbitrary. It become quite complex to attribute taxes from this
source to regional governments (Ashetu Chole, 1994).

The over all gross revenue to GDP ratio was accompanied by changes in the composition of revenue
between, at the end of 20th century taxes contributes 91% and 61% to the total government revenue.
But after some year it decreases by some amount of 85.6 million birr and non-tax revenues are rises.
According tax assignment principle, there is the difference tax based and tax rates as the same layer of
government. This non-uniformity in tax rate is said to be much interior to that of uniform tax system
which may contribute more for the economic growth (Ashetu chole, 1994).

During the pre-1974 period, the contribution of tax to total revenue range between 91.5% and 84.4%
the average of the period being 89% where as during the post 1974 this share declined from 86% to 61%
around 1977 though the contribution of taxes to total revenue has been declining they have remained
the main source of government revenue in Ethiopia even it the large parts of Ethiopian government
revenue is drawn from taxes from international trade transaction for the first three decades of second
half of twenty century its share in total revenue was declining in the same time.
Their average contribution during the fifties had been 46% declined to 41% during the sixties and to
about 35% during the seventies.

During the fifties taxes on property including land tax, education tax, health tax, tax on transfers of
property and taxes on construction work come second.

4
In the revenue importance to taxes on international trade transaction. But their share during the decade
experienced a marked declined from about 25 percent to 13 percent. Since then however, their
contribution declined consistently until 1978, when rates of land uses fees paid by members of
cooperatives and individual farmers where raised from 3 and 4 birr to 5 and 10 birr respectively( Eshetu
Chole,1994).

1.3 Objective of the Study

1.3.1General Objective
The general objective of the study was to assess and analyze the main contribution of tax for economic
growth.

1.3.2. Specific Objectives

The specific objective of the study is:-

 To see how tax affects the development of one country’s economy

 To assess the contribution of tax according to their categories.

 To see the role of tax contribution from their source point of view
 To give policy recommendations for the assessed results.
1.4 Hypothesis of the Study
This research hypothesis that expected there is a positive relation ship between the tax contribution and
the economic growth.

1.5 Scope of the Study

The study of the paper would focus on the contribution of tax in general regarding with the socio-
economic activities of the societies. The paper deals with the data recorded around twelve years in
sequence order.

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 1.6 Significance of the Study
First and fore most, the paper created awareness for the society members including government what
contribution of the on the socio-economic growth second it would give a clue about what policy
measurements should be taken accordingly. It would also help the policy makers in designing policies
alleviate of the contribution of tax problems. It would provide an imitative and strategy piece of
information for further studies in the country related to the topic. More over, it would provide
information and recommendation about the contribution of tax for economic growth of a nation as a
whole

1.7 Limitation of the Study

While conducting the research the following problems are encountered.

 In adequate data on the topic has limited in the extent of work

 The time frame and given to collect the data for the research where not enough.
Even if, the study tried to used Internet the probability to get sufficient information regarding the study
context was difficult.

1.8 Organization of the Study

This paper has four chapters. The first chapter deals with the introduction part which includes:
Background of the study, statement of the problem, objective of the study, hypothesis of the study,
limitation of the study, significance of the study, scope of the study and methodology of the study which
deals with method of data collection and data analysis. The second chapter of this study focused on
literature review parts which include both theoretical and empirical literature. The third chapter deals
with the analysis and presentation of data about main contribution of taxes. The last section focused on
conclusion and recommendation of the paper that would deals with summarized the finding of paper
and draws some policy implication.

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 1.9. Methodology of the Study
1.9.1. Data Source
This research depends on secondary data source. In doing so, it would find data that documented for
some years in sequence order. The data collected from annual report of the federal tax revenues. The
paper focused only on the secondary data source. The survey is conducted for more than one week to
get enough data from the organization.

1.9.2. Data Analysis

After all the required and relevant data were collected, processed and arranged properly it would be
subjected to the descriptive analysis which includes statistical tools such as table, presenters, graphs in
order to achieve the objective of the study.

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 CHAPTER TWO

Literature Review

2.1 The Importance of Taxation

Taxation is the system of raising money to finance the government. It is required to cover government
expenditure. Government at all level state and natural required people and business to pay taxes for
along time government imposes taxes to raise revenue only to cover the cost of administration and
defense and in the case of deposit monarch’s personal expenditure of the ruler. In addition government
uses tax revenue for the payment cost of police and fire protection, health programmers, schools, roads,
national defense and many other public services. It was recognized at quite an early date. Some services
such as the maintenance of low and order at home and defense against external enemies could be
provided more efficient by the state, individuals and taxes raised to cover their cost could be regarded as
payment for service provided by the state for the community as a whole
(Anselin, Sharp and Charles A. Register, 1989).

Taxes are as old as government. The general level of taxes has varied through the years depending on
the role of the government. In modern time, money government especially in advanced industrial
countries have rapidly expanded their roles and taken on new responsibilities. As result their need for
tax revenue has become great. Through the years people have friendly protested against tax increases.
In situation tax payer have favored keeping service at current level on reducing them. Voter have
defeated many proposes for the tax increase by state and local governments. In real, in distinct from
money terms taxes are lived in order to curtail the demand in the private sector of the economy and
there by free factor of production which is limited in supply for the government requirements in the
public sector. This particularly, obvious in the cost of labor. Now a day, taxes are no longer imposing
solely for the purpose of covering the un avoidable cost of administration, defence and money other
government service.

8
 2.2 Classification of Taxation.

Although some economist prefer to classify taxes as income tax, property (wealth’s taxes) and
consumption taxes, more conventional of classification of tax is categorized as direct and indirect taxes.

2.2.1. Direct tax

According to Dalton, direct taxes are those which are paid entirely by those persons on home they are
imposed. Direct taxes are those taxes which cannot be shifted to others. Examples of direct taxes are.

- Income tax
- Capital gain tax
- Property tax
2.2.2. Indirect Tax
Indirect taxes are taxes on goods and service. They also referred to as commodity or consumption taxes.
On the other hand, it is a tax in which the burden may not necessarily be swallowed by the accesses which
means indirect tax can be shifted on to other persons. They are paid only when particular transaction of
good and services affected. Generally the tax incidence of indirect tax is on ultimate consumer; however,
sometimes seller might be absorbing such indirect tax to be competitive in the market. This action reduces
its profit.
Some of indirect taxes are
- Custom duties
- Excise tax
- Sales tax
-Value added tax (VAT)

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 2.3 Objective of Taxation.
Initially, governments, imposes taxes for three basic purposes:
A. Fiscal or budgetary objectives: budgeting has been describing as the process of the allocating scarce
resources after obtaining estimates of the revenue that will be provided by all revenues sources at current
rates of taxes, fess and other changes to meet.
B.Economic objectives: taxation policy can be a key factor of the planned economic growth that a
country by striking an equilibrium because of fiscal and monetary policy.
C.Social objectives: reallocation of resource is furthered in tax policy. The objective regarding with
inequalities in the distribution of income and wealth to the extent they are considers excessive and unjust
between rich and poor (Misrak Tesfaye, 2008).

2.4 Basic Characteristics of Taxation

A good tax system has the following characteristics:

1. Tax is a compulsory contribution: tax is a compulsory payment from a person to the government with
out any expectation of any direct return. As it is compulsory contribution, no one can refuse to pay tax for
the reason that he/she does not get any benefit from certain public services the government provides.
2. The assessed (tax payer) will be required to pay tax if it is due from him. No one can be forced by
authority to pay tax, if it is not due from him/her for example. If there is a tax on tobacco a government
can forced an individual to pay the tax only when he/she smokes. Similarly if an individual’s in come is
income is below the exemption limit, he/she cannot be forced to pay tax on income (Misrak Tesfaye,
2008).

3. Taxes are levied by the government

No one has the right to impose taxes. Only the government has the right to impose taxes and collect tax
proceeds from the people.

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4. Common benefits to all
Tax collected by government is spent for the common benefit of all peoples whether they are tax payers or
non tax payers. The government incurs the expenditure for defence, maintenance of laws, construction of
schools, hospitals and other public services.

5. No direct benefit
The government collects all types of taxes and does not give any direct benefit to tax payers for taxes paid.
Tax payers do not demand any direct benefit from the government for the amount they have paid.
6. Certain taxes levied for specific objectives
Though taxes are imposed for collecting revenue for the government to meet its expenditure, certain taxes
are imposed to achieve specific objective
7. Attitude of the tax-payers
The attitude of tax payers is an important factor in determining the contents of a good tax system. The
attitude of the tax payers are influenced by other factors such as educational level, political, social and
economic situation of the country.
8. A good tax system should be in harmony with national objectives. It should run in harmony with
important national objectives. It should try to address and accommodate the attitude and problems of tax
payers. It should also generate adequate revenue for the government while addressing the attitude of tax
payers. The tax system should be flexible enough to cope with the changing requirements of the economy
that the country adapted.
9. Tax-system recognizes basic rights of tax payers. A good taxes system considers the basic rights of
the tax payers. Of course the tax payers aware of the benefit of paying tax and pay tax on time but it
should wit be with harassment of tax collectors. To keep the basic rights of tax payers there must be a tax
law, which is simple in language and understandable tax liability, what expected from each tax payer has
to be determined with full certainty (Gebre Worku Mengesha, 2008).
2.5 Principles of Taxation.
Today economists have rather different ideas of what constitutes a good tax system. Most believe that a
tax system should follow two main principles; fairness and efficiency.

11
Fairness: economists consider two principles of fairness to determine whether the burden of a tax is
distributed fairly: the ability to pay principle and the benefits principle.
A) The ability to pay principle
It holds that people’s taxes should be based up on their ability to pay usually as measured by income or
wealth.
One implication of this principle is horizontal equality, which states that people in equal position is should
pay the same amount of tax. If two people both have in come of birr 50,000 and horizontal equity requires
that pay that same amount of tax.
A second requirement of the ability to pay principle is vertical equity. The idea that the tax system should
be distributed the burden fairly across people with different ability to pay. This idea fairly across people
with different ability to pay. This ideas implies that a person with higher in come should pay more in taxes
than one with less income (Misrak Tesfaye, 2008).
B. Benefit Principle
It status that only the beneficiaries of a particular government program should have to pay for it. The
benefits principle regards public services as similar to private goods and regards taxes as the price people
must pay for these services. The practical application of benefit principle is extremely limited, because
most government services are consumed by the community as whole. One can not estimate the benefit
received by a particular individual for general public services such as national defense and local policy
protection.

One can make a case, for some taxes, there is a relation ship between taxes paid and benefits received .As
example gasoline taxes are used to finance high way construction but even here the link between taxes and
benefit is weak. Despite its intuitive appeal the benefit principle is not important in practice and it plays
little role in the desire of tax systems (Gebrie worku menegesha, 2008).
Efficiency: - in addition to being fair a good tax system should be efficient wasting as little money
and resources as possible. Three measures of efficiency are:
A) Administration costs

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Running a tax collection costs tax authority. The government must hire tax collector to gather revenue,
data entry clerks to process tax returns auditors to inspect questionable returns flow of money. No tax
system is perfectly efficient.
B) Compliance costs
Complying with the system paying taxes costs tax payer’s money above and beyond the actual tax bill.
These costs include the money that people spend on accountants, tax lawyers, and tax prepares as well as
the value of tax payers time spent filling out tax returns and keeping records.
C) Excess burden
A third measures of a tax systems efficiency takes in to account the face that when the government levies
a tax on goods, it distorts consumer behavior people buy less of taxed goods and more of other goods.
2.6 Effects of Taxes.
To understand the effects of any tax, one must first determine who bear the burden of tax the way a tax
affect people is known as tax incidence. The statutory incidence of tax refers to the individual group who
must legally pay a tax. In contrast, the economic incidence of tax refers to its actual effects on people’s
income. The economic incidence of a tax depends on how buyers and sellers of the commodity react when
tax is imposed. To under stand the effects tax dealing with the following terms will be important.
A. Labor supply
An economy’s labor supply is the number of hours that people work. Taxes can affects the labor supply by
influencing people decisions about whether to work and how much to work
B .Saving
Saving is portion of in come that is not spent might taxes levied on returns to saving (such as interest and
dividends ) influence the amount people saves. When a tax is levied on interest or dividends it reduces the
rewards for saving. On the other hand, when interest is taxed, an individual must save more to achieve any
particular saving goal (Misrak Tesfaye, 2008).

C) Investment

Taxes also influence the type of physical investments that business makes. This is because the government
taxes returns on some types of investments at higher rates than others. These differences cause businesses

13
to make investment decisions based on tax consequences, rather than whether they are sound from a
business point of view by distorting physical investment decision. The tax system leads to an in efficient
pattern of investment.

D) Tax evasion and avoidance

Tax evasion is failing to pay legally due taxes. One important way that high tax rates affect behavior is by
increasing evasion. Tax cheating is externally difficult to measure however the greater tax rate, the greater
the incentive to defraud the government. Tax avoidance occurs when people change their behavior to
reduce the amount of taxes the legally owe.
2.7 Tax Revenue Policy
The tax system reform project aims to create a tax system that is more supportive of private sector
development, improving revenue collection and ensuring equity and fairness of the tax system. The tax
reforms that have been initiated will lay the foundations for a strengthened revenue base. Continuing
efforts to improve tax administration and collection, including strengthening the large tax payer unit, have
resulted in increasing tax revenues.
Reforms have sought to stream line and close loopholes in the income tax make the incentive system more
efficient strengthen the collection of domestic indirect taxes through selective rate increases and broaden
the tax base (Gebrie Worku Mengesha, 2008).

Tax Reform Greatly Benefited the Country in:

A. Tax policy and legislation
The over haul of tax legislation is designed to encourage capital investment and development establish a
sustainable domestic revenue base and ensure equity, fairness and consistency in the administration of tax
laws.

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 B. Presumptive taxation
Presumptive taxation provides the instrument to broaden the tax base and raise more revenues from the
hard to tax group (category tax payers) including the cargo informal sector and tax agers who understate
income.
C .VAT implementation
The FIRA (Federal Inland revenue authority) established a separate VAT department and two new
regional offices to administer.

D .Tax payer Identification Number System (TIN)

To make tax collection system easier to administer FIRA is developing the TIN application software.
E .FIRA Organization
In view to accommodate the growing need of tax collection schemes FIRA’s hired additional personal and
increased its operational efficiency.
F. Operational Programs, Systems and Procedures
 A large tax payer office has been established in Addis Ababa to manager tax payers who account
for 75-80% annual tax revenues with view to save guarding the majority of tax revenue and providing
better service and advice to the respective tax payers.
 Manual tax payers accounting system have been developed for all taxes.
 Operating manuals have been produced for the accounting audit and collection enforcement
functions.
G .Regional cooperation
The city and regional tax authorities have actively participated in workshops, seminars and study tours and
contributed to the development of new tax policies and legislation, the standard assessment presumptive
tax method, the TIN business system requirements and the registration and education of VAT tax payers.
H. Tariff reform and modernization
Ethiopia being a member of the international convention on the harmonized commodity description and
coding system, and following the economic reform program launched since mid-1992 by the government,

15
the harmonized system has replaced the former tariff structure in August, 1993( Gebrie Worku Mengesha
,2008).
2.8 Revenue collection.
During the imperial and derg regime government revenue collection was under taken by the central
government. But during the FDRE particularly since 1993/94, according to MEDac, revenue collection
has been carried out at the federal and regional states level. Basically, revenue sources are divided in to
central, regional and joint. The three type of revenue sources are adopted form MEDac 1999 as the
revenue sources for federal government included duties, taxes and other charges on imports and exports,
personal in come tax form employees of federal government and international organizations, including
NGO’s personal income tax, profit tax, sales tax form enterprises owned by the federal government, taxes
from enter prices owned by and other chance winning prizes tax collected from on income from air, land
and marine transport activities, taxes from rent of houses and properties owned by the federal government
and charges and fees on licenses and services issued or rendered by the federal government (Ayele kuris,
2006).
The revenue sources allocated to national and/or regional government include personal in come tax from
employees or regional governments; rural land use fees agricultural income tax form individual farmers (
incorporated in an organization); profit and sale tax from individual traders; tax on income from include
water transportation; taxes from rent of house and properties owned by the regional government; income
tax loyalties and rent of land levied on small to medium scale mining activities; charges and fees on
licenses and services issued or rendered by regional governments.

Finally, joint revenue sources are profit, personal income and sales taxes from enterprises jointly owned
by the federal and regional governments, divided and sales taxes from corporate business organizations
profit tax, loyalty and rent of land collected from large scale mining, petroleum and gas operation and
forest loyalty (Ayele kuris, 2006).

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 2.9 single VS multiple taxation.

Based on the number of taxes a tax system may be classified as single or multiple
2.9.1 Single tax system
A single tax system means only one kind of tax (one tax base) one can make single tax proportional,
progressive or regressive. Modern economists do not favor single tax system because it cannot generate
adequate revenues to the government and is regressive in its nature. A merit of it is simplicity.
2.9.1 Multiple tax system
Modern tax systems have laid great stress on the a diversity of taxation that is there should be all types of
taxes, direct and indirect, so that every class of citizen may be called up on to contribute something
towards the government revenue. In multiple tax system, the burden of taxation is widely distributed on
the entire economy with out causing much harm to anyone. (Gebrie Worku Mengesha, 2008)
2.10 Tax system and tax structure
A. Proportional Tax Structure
A system that taxes every one at the same rate, regardless of his or her income bracket. Supporters of a flat
tax argue that it gives people incentive to earn more, because they could not be penalized by graduating to
a higher tax bracket income tax on games of chance is an expel of proportional tax. If Alazar wins birr
50.000 and Melat wins birr 100,000 both person pay taxes equal to 15% of prizes, birr 7500 and 15,000
respectively. It suffers from the defects of in equitable distribution of the tax burden lack of elasticity and
in adequacy of fund for the increasing needs of the modern government; hence it is practically and
universally accepted.

B. Progressive tax structure

It is a tax that is larger as a percentage of in come for those with larger in comes. It is usually applied in
reference to income taxes where people with more in come pay a higher percentage of it in taxes. The
term progressive refers to the way rate progresses from low to high. The rate of tax of taxation increases
as tax base increases.

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C. Regressive tax structure
A regressive tax is a tax which takes a lager percentage from people whose income is low. Often it is a
fixed tax every person has to pay the same amount of money, such as poll tax. A poll tax is a fixed tax for
each person pays the same amount of money; it is a lower preparation for people with higher income. A
regressive tax fall more heavily on the poor section of the community, then on the richer section, thus, it
violates the principle of equity and social justice. (Gebrie worku,2006)

Table 2.1 Tax structure and its rates

Tax rate (%)

Tax base (in birr) Proportional Progressive Regressive

1000 10 10 50

2000 10 20 40

3000 10 30 30

4000 10 40 20

5000 10 50 10

Source: Gebrie Worku 2008

From this table, as the tax base increase proportional tax structure shows the constant tax rates and
when the tax base increases proportionally, the progressive tax structure also shows the proportional
increarement.On other hand, regressive tax structure shows the inverse relation ship between tax rate
and tax base.

The relation ship between tax structure and tax amount can be illustrated depending up on the following
table.

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 Table 2.2 tax structure and tax amount

Tax amount (in birr)

Tax base ( in birr) Proportional Progressive Regressive

1000 100 100 500

2000 200 400 800

3000 300 900 900

4000 400 1600 800

5000 500 2500 500

Source: Gebrie Worku Mengesha, 2008

From the above table when tax base increases proportionally the structure of tax is also increases
proportionally. t. On the other hand, when the tax base rises, the taxes structure of regressive rise
first and it starts to decline to the first position.

The following table shows the current Ethiopian progressive tax structure in relation to tax rate and
tax amount.

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 Table 2.3 progressive tax structure

Employment income tax (per month) Tax rate (%)

0-150 Exempt threshold

151-650 10

651-1400 15

1401-2350 20

2351-3550 25

3551-5000 30

Over 5000 35

Source: Gebrie Worku Mengesha, 2008

This table shows the tax amount and its rate that imposed on employment income per month
regarding with what they get per in month. From this table, every person has the duty to pay the tax
for the government from what get per month when their income is above 150 birr. As an example the
person whose income is 2350 pays 2350 x 25/100 =587.5 tax revenue for the government per month.
On the other land, the person whose income is 200 pays 200x10/100=20 birr tax revenue for
government per month. As it is possible to understand from the table, the different tax amount on
employees is due to the tax rate that imposed on as it is mentioned before Ethiopia follows the
progressive tax structure currently.

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Graphically it can be depicted as follows

Figure 2.1 Ethiopian progressive tax structures.

Income in birr

As it is clearly explained on the above table as the income of the employee’s increases, the amount of
tax that person pays for the government increases simultaneously since the country, Ethiopia follows the
progressive tax structure which deals with the increment of income of one person. (Gebie worku
mengesha, 2008)

The revenue constitutes the lion share of government revenue in the year of 1992/93 to 1997/98 under
the consideration, taxes contributed on average about 69. 4% of total domestic revenue of which 38.8%
is direct tax and 31% are from indirect taxes and form indirect taxes and trade taxes respectively
.Expressed as a ratio of GDP at market prices. (Birhanu Nega, 1999/2000).

Tax revenue has shown substantial changes both in terms of size and structure during the year of
1982/83 to 1997/98. Tax revenue has jumped from 1.6 billion birr in 1982/83to 5.3 billion birr in
1997/98. The largest amount of tax revenue in collected during the previous regime was 2.37 in billion
collected in 1998/99. The recent increased in tax is mainly from introduction of new taxes such as
revenue from urban land lease, mining in come tax, rental in come tax and so on. Another factor that
contributed the rises in the taxes is the increasing effect exerted improving tax administration by the

21
 regional government particularly, since fiscal decentralization. The tax revenue collected from regions
increased from 53 million in 1995/96 to 830 million by 1996/97 and 984 million 1997/98 all most
doubling in just four years this clear indicates that regional government has improved tax collection
capacity hand significantly equality, importantly the increasing in over all economic activity as indicated
by 5.4% average amount growth real GDP during the first years of the new government has bordered the
tax allowing in the over all increase in the tax revenues. (Birhanu Nega, 1999/2000)

Table 2.4 the average annual growth of tax revenue

Period Average annual Share of tax From Domestic Tax share Average annual
level (in million GNP rate growth
birr)

Prices

1983/83-1990/91 1981.9 13.9 70.00 3.4

1991/92-1997/98 3732.8 10.9 68.6 16.3

1992/93-1997/98 4354.9 12.7 80.0 19.0

1982/83-19995/96 2747.9 12.6 69.4 9.1

Own computation from budgetary revenue

Over the sixteen year period (1988/83 to 1999/98) tax revenue has registered an average annual growth
of 9.1 % a dramatic increase is registered since 1991/92. During the nine years period (1982/83 to
1990/91) tax revenue has shown an average annual growth of only 3.4 % and still worse. Foreign trade
tax has been declining on average by 0.3% annually. Conversely the seven years period of the new
regime (1991/92 to 1997/98) has witnessed average revenue of the growth of 16.3% per annum when if
we start from the high level of tax revenue achieved by derg regime in 1988/89, there is a 144% increase
in tax revenue by 1999/98.

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 CHAPTER THREE
Data analysis and presentation

The data obtained from Ethiopian revenue authority shows that in Ethiopia there are too broad types of
taxes. These types of taxes are direct and indirect taxes. Under direct taxes, the study deals with wages
and salaries income taxes, rental income tax, and profit tax for corporate business. Dividend and chance
winning income tax, with holding tax imports and interest income tax. Indirect tax which is dealing with
domestic indirect taxes of the study cases included value added tax (VAT) excise tax; turn over tax (TOT)
stamp duties and sale tax.

On the other hand, the total GDP at constant market price is obtained from ministry finance and
economic development (MOFED). This presents the data gathered from secondary source relation to
both types of taxes and their contribution to the total revenue separately collected by the federal
government of Ethiopia during the last twelve years.

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 3.1 Direct tax categories and its share from total tax revenue and GDP.
Table 3.1share of direct tax from total tax revenue and GDP
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 total
Wages & 199.36 225.74 266.58 318.44 333.79 342.04 307.32 398.07 480.98 556.35 794.17 1017.37 524.21
salaries
income tax
Rental 0.98 0.23 30.38 25.78 17.39 11.66 2.04 0.21 0 0 0 0 88.67
income tax
Business 813.10 902.89 1074.24 1049.24 1220.01 1070.32 957.84 1031.62 1245.92 1558.01 2409.43 3661.76 15195.32
income tax
Dividing 3.25 3.97 5.97 7.33 20.72 23.44 56.51 36.90 56.47 85.38 80.03 118.86 2550.11
&chance
winning
income tax
Withholding 0 0 0 66.68 198.27 140.73 184.58 591.78 240.80 294.55 344.83 130.14 2182.72
tax on
import
Interest in 0 0 0 1.05 20.00 20.63 20.67 22.67 29.29 51.29 52.95 68.13 286.68
come tax
Total direct 1016.60 1132.83 1377.87 1467.92 1801.18 1608.82 1528.36 1681.27 2053.46 2646.07 3781.41 5396.26 25442.68
tax
Growth rate - 11.4% 21.6% 6.5% 22.7% -10.6% -5% 10% 22% 28.8% 42.9% 42.7% 19.6%
of direct tax
Total tax 2007.77 2178.59 2606.92 2660.07 3072.26 3026.81 3350.84 5850.84 4590.16 5804.94 8009.59 11381.66 52540.37
GDP at 44840.3 48803.3 53189.8 54210.9 51760.7 52813.8 55015.6 58703.2 61011.1 63451.3 66233.4 64582.9 674765.03
market
price
Share direct 0.5 0.52 0.53 0.55 0.59 0.53 0.46 0.44 0.44 0.46 0.47 0.47 0.485
tax from
total tax
Share of 0.022 0.023 0.025 0.027 0.03 0.03 0.027 0.028 0.033 0.041 0.05 0.08 0.037
direct tax
from GDP
Share of 0.045 0.04 0.049 0.049 0.059 0.058 0.06 0.07 0.08 0.09 0.13 0.17 0.077
total tax
from GDP
Total tax - 8.5% 19.6% 2% 15.5% -1.4% 10.7% 14.9% 19.2% 27% 37.9% 42% 16.4%
growth rate
Source: own computation from ERO data

As the table shows ,the share of direct taxes are increasing all years of study period except in the year
interval of 2002/03 -2004/05. In this year the growth rate of direct tax was -10.6% and -5%. The
collection of tax from direct taxes has great contribution in the increment of the nation economic
growth. As the table indicates the contribution of direct taxes during the study year was 48.5% an
average from total taxes revenue and 3.7% from GDP at constant market price. This tax covered around
more than 40% of total taxes from 2003/04-2008/09.

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 As we can justify from the above table the amount of revenue collected from direct tax are showed the
decreasing situation in the year of 2002/03 and 2003/04. In this year the total direct taxes are decreased
by 192.36 million ( -10.68% ) in 2002/03 and 80.46 million in amount ( -5%) in 2003/04. The main reason
for the decreasing of total direct taxes in these years was the declining amount of business income tax by
149.69 million birr or -12.27% in 2002/03 and 112.48 million birr( -10.5%) in 2003/04.

As it can be calculated from the above table, the reason for this situation was the negative growth rate
of business income tax. This tax sources growth rate was -12.26% in 2003 and -10.51% in 2003/04.
Regarding with condition the contribution of direct taxes for total tax during this years also declined by
the same amount from the total direct taxes because total tax is the function of total direct tax and
indirect taxes.

From the given data we can understand that some types of direct tax sources shows the lion share from
total tax and GDP relatives to other sources of direct tax. As an example profit tax for corporate business
(business income tax) contributed 59.6% from total direct taxes. This implies among the sources of direct
taxes, the share of business income tax covered the great amounts than all other sources.

The share of this tax to total direct tax has been increased during the years of study except the three
years of study time. That means in the year of 2000/01 its growth rate was decreased to -2.39% and also
the share it for respective two years of 2002/03 and 2003/04 was shown the decreasing growth rate of -
12.26% and -10.51%. On the other hand, business income tax as shown the highest growth rate in year
of 2007/08 by providing 51.3%.

On contrary, among the direct tax sources the share of rental income tax from total direct tax was
0.34%on average. As we can understand from its share, this source was the least among other sources of
direct tax types of categories. Throughout the studies the share of rental income tax from total tax
revenue was around 0.16% and its share from GDP was around 0.013% on average. This predicted that
the share rental income tax from GDP of the nation was low in amount. The reason regarding the
situation was exempted of more rental income tax sources from revenue generating.

As it is illustrated on the above table the rental income tax contributed the least amount of share almost
in all years of the study. The share of rental income tax on the total direct tax revenue shows the
constant contribution through the year of its contribution except in the year of 1999/00 that it shows the
increment situation.

Business income tax on the other hand shows both the increasing and decreasing provisions for total tax
and direct tax revenues. According to the above graph business income tax contribution was decreasing

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by decreasing rate from 1997/98 to 1999/00 and it decreased by increasing rate from 2000/01 to
2005/06.Inspite of this business income tax increases by increasing rate from 2006/07 to2008/09 in the
case of total direct tax shares. In the case of its share with total tax revenue it increases by decreasing
rate from 1997/98 to 1999/00. The trends of total
direct taxes and total tax with the share of GDP can be illustrated by using the following graph.

Graph 3.1 share total taxes with GDP

Share in percent.

Years

Key: series 1-share of total direct tax (%)

Series 2- share of total tax (%)

Source: own computation from ERO data

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 As the above graph shows, the share of direct taxes from GDP rises though the study years. It
contributed around 3.7% on average. As it shown on the graph the direct tax increases by increasing rate
from 2005/06 to2008/9. In contrary its share decreases by decreasing rate from 2003/04 to 2004/.

The share of total tax revenue from GDP during the year of study shows the increasing situation almost
in all years of the study. It contributed around 7.7% for the increment of GDP.The share of total tax from
GDP was highly increased during the year of 2006/07to 2008/09 by 8% (17%-9%). This contribution was
the highest through the year of the study.

From the above graph we can observe that as the share of total tax increases, the total GDP also
increases. That means total tax and GDP have positive (direct relation ship) to each other. Since GDP is
the function of salary, wage, rent, profit and other factors that generated income in the case of income
approach of generating GDP of the nation. The relation ship between GDP and tax is positive. Besides of
this reason the increasing of tax revenue shows the increasing of national income in a sense the GDP of
the nation. Graph 3.2 above clearly shows that the contribution of tax for the nation income is
encouraged for the rising of national production.

Generally, the positive relation ship between tax and GDP of the nation can facilitate the good condition
for the economic growth of the nation. In other words it contributed the real contribution in the
economic stability of one country. This was due to the objective taxation of the economy.

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Graph 3.2 illustrates the trend of direct tax growth rate and total tax growth rate.

Growth rate in percent

Years

Source: own computation from ERO data

As the above graph shows, the growth rate direct tax and total have the direct relation ship through the
study of time. Since total is the function of direct tax and indirect taxes, the increment of direct tax
growth shows the increment of total tax growth rate. Concerning the above graph the growth of direct
tax shows the decreasing condition in the consequensive of two years. In these two years (2002/03and
2003/04) the growth rate of direct tax was decreased to -10.6% and -5% respectively.

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 Besides with the situation the growth rate of total tax 2002/03 and 2003/04 also declined to -1.4% and -
10.7% respectively. The reason for this situation was the decline amount of total direct taxes as it is
shown on table 3.1.

As it shown on the graph both total tax and direct tax growth rate was increasing by increasing rate
between the years of 2005/06 to2007/08. This situation encourages the total revenue of the county.
Though the revenue of the nation encourages the growth of country in the case infrastructure in the
economic growth, the increasing rate of total tax is the main issue.

3.2 Category of domestic indirect tax revenue

Under domestic indirect tax category, the most frequently used tax types are: value added tax (VAT),
excises tax, turn over tax (TOT), stamp duties, and sales taxes. The distribution of each domestic in direct
tax can be summarized by using the following table.

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 Table 3.2 share of indirect tax revenue from total tax revenue and GDP at current market price

Description 1997/9 1998/99 1999/0 2000/0 2001/0 2002/03 2003/04 2004/05 2005/0 2006/07 2007/0 2008/0 Total
8 0 1 2 6 8 9

VAT - - - - - 372.26 1220.7 1542.8 1819.8 2390.31 2934.3 4585.0 14865.2

5 2 4 8

Excise tax 414.2 417.2 431.89 312.4 343.12 362.32 413.9 466.6 577.32 603.37 834.49 1053.6 6231.05

TOT - - - - - 40.42 132.6 82.43 51.95 57.86 64.85 69.43 499.34

Stamp 49.46 54.86 51.92 58.02 45.12 52.11 53.11 75.18 84.2 104.8 109.47 121.62 859.27
duties

Sales tax 487.96 527.6 684.02 764.82 860.24 579.14 - - - - - - 3903.78

Total 951.62 999.88 1167.8 1135 1249.7 1456.45 1820.31 2167.01 2533.3 3155.63 4324.1 6032.9 26942.8
indirect tax 3 6 4 9 5

Growth 39.5%
rate of - 5% 16.8% -.8% 10.1% 16.6% 25% 19% 16.9% 24.6% 37% 17.2%
indirect tax

Total tax
revenue 2007.77 2178.83 2606.9 2660.0 3072.2 3026.84 3350.82 3850.16 4590.9 5804.94 8009.9 11381. 52540.3
2 7 6 4 5 66 7

Share of
indirect tax 0.47 0.46 0.45 0.45 0.41 0.47 0.54 0.56 0.56 0.54 0.53 0.53 0.515
from total
tax.
Growth
rate of - 8.5% 19.6% 2% 15.5% -1.4% 10.7% 14.9% 19.2% 27% 37.9% 42% 16.4%
total tax

GDP at
market 44840.3 48803.3 53189. 54210. 51760. 52813.8 55105.6 58703.2 61011. 63451.3 66233. 64582. 674765.
price 8 9 7 8 4 9 03

Share of
indirect tax
with GDP 0.022 0.022 0.022 0.021 0.024 0.027 0.033 0.04 0.042 0.05 0.06 0.09 0.04

Share of 0.077
total tax
with GDP 0.045 0.04 0.049 0.049 0.059 0.059 0.06 0.07 0.08 0.09 0.13 0.17
Source: own computation from ERO data.

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The above table illustrates that in the period 1997/98 – 2008/09 contribution of value added tax,
stampduties, excise tax, sales taxes and turn over tax from the total tax revenue are respectively

28.3%, 1.6%, 11.85%, 7.43% and 0.9% on annual average rate.

As it can be understood from table above, domestic indirect tax contributed 51.5% (0.515) in ratios
from total tax revenue on average. Indirect tax contributes the minimum amount for total tax revenue in
year 2001/02 by the share of 0.41 in ratio or 41% on average. Regarding with the proclamation of value
added tax and turn over tax, the share of domestic in direct tax was increasing by increasing rate ,
specially during the period 2002/03 -2005/06 by the share of 53.25% or 0.53 in ratio. In contrary in the
period 1997/98 -2000/01 and 2006/07-2008/09 the share of domestic indirect tax from total tax was
declined by declining rate.

In 2008/09 the growth rate of domestic in direct tax reached a maximum point. The growth rate of
domestic indirect tax in this year was 39.5%. Like direct tax growth rate the growth rate of domestic tax
had shown both negative and positive growth rate condition. In 2000/01 the growth rate of indirect tax
was -2.8% which is the minimum growth rate of domestic in direct tax through the study years.
Nevertheless, the reality on the ground displayed different phenomena, as it shown in table 3.2 domestic
tax growths rate through the year of study was around 17.2% (0.172) ratio.

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 Figure 3.3 the growth rate of domestic indirect taxes.

Growth rate in percent

YEARS

Source: own computational ERO data.

As the figure 3.3 clearly discloses, the rate is decreasing by increasing rate in year 1999/00 -2000/01. As it
can be understand from figure 3.3 the growth rate of indirect tax was decrease by decreasing rate from
the year 2003/04 -2005/06. As it was shown in table 3.2 above the growth rate of total tax and indirect tax
have been rising from 2005/06 - 2008/09 simultaneously. Thus, in discussing the trends of government
revenue growth rate in the case of domestic indirect taxes, it contributed the good share for total tax
revenues.

As shown in table 3.2 the ratio of domestic indirect tax to GDP rose from average of 2% in year 1997/98 to
average of 9% in year 2008/09. In fact, the share of domestic indirect tax from GDP in 1997/98-2008/09
was 4percent on average. Like direct taxes, domestic indirect tax has been contributed the ratio of 0.02-

32
0.09 through the study period .The minimum ratio of domestic indirect tax to GDP was in the year of
1997/98.

As it can be understand from table 3.2 domestic indirect tax contributed the maximum share from GDP
in 2008/09. In this year the share of indirect tax was numerically 0.09inratio or 9 percent on annual
average. Since the measuring of GDP in the case of expenditure approach is dealing with the summing up
of all final good and services in the economy, the relationship between GDP growth and contribution of
domestic indirect tax for GDP is positive. This is due to domestic indirect taxes are collected from the
final good and services either domestically produced or imported from abroad . Thus the relation ship
between GDP and indirect tax is positive or direct relationship.

In period 1997/98 -2001/02 the percentage share of domestic indirect tax was 44.8 percent from total
tax revenue and 2.14 percent from GDP. The consecutive seven years (2001/02-2008/09) its share from
total tax revenue and GDP was 53.28 percent and 4.9 percent respectively. However, when we
compared the share of domestic indirect tax from total tax and GDP in period 1997/98 -2001/02 and
2002/03-2008/09, its average contribution was increased by 8.48 percent and 2.76 percent from total
tax and GDP respectively. This condition was due to the proclamation of turn over tax and value added
tax on January 1, 2003.

As table 3.2 above shows the contribution of total tax from GDP in period 2002/03 -2008/09 was rising
with the establishment of some source of domestic in direct taxes. The share of total taxes from GDP
regarding with indirect tax contribution was reached its maximum contribution in 2008/09 by
contributed 17 percent on average. On the other hand the annual growth rate of GDP at current market
price in period of 1997/98 -2001/02 was 3.76 percent on average and the annual growth rate of it in
period 2002/03 -2008/09 was 3.17 percent.

From this point we can understanding that even if the share of indirect tax to GDP has been increased in
the same period, the growth rate of GDP was shown decreasing rate on average by -0.49 percent. This
shown us that GDP is not only functions of taxes.

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 Figure 3.4 Trends of total tax revenue as share of GDP

YEARS

Sources: Own computation from ERO data

Regarding with trends in GDP, generally it has up ward but fluctuation trend as shown in figure 3.4.. The
performance of agricultural sector in turn is highly dependent upon the weather condition (rain fall).
Thus GDP registers the highest figure when there is timely and sufficient rain fall as well as during the
recovery from very low base and lowest when this is not the case. When this is analyzed with tax
contribution, the share of agricultural income tax for the total tax revenue has been providing the
highest contributions. Regarding with this situation the performance of agricultural sector for GDP has
great contribution.

As shown in3.2 the share of same types of domestic indirect taxes from total tax revenue and GDP had
been provided high contribution relative with other sources. Among these sources, the contribution of

34
value added tax from total tax and GDP was the highest shares than other sources of indirect tax
categories. From all types of indirect taxes the share of VAT through the period of the study was
increasing by increasing rate. The annual average growth rate of VAT in period 2002/03 -2008/09 was
54.6 percent on average.

Regarding with its increasing rate the share of VAT from total tax and GDP was 28.29 percent (0.28) in
ratios and 2.2 percent (0.22) in ratios. As it is shown in table 3.2 the share of total indirect tax from GDP
is only 4 percent. Among this share half of it contributed by VAT. From this, we can understand that VAT
is stimulating economic growth and improve the relationship between growth domestic product and
government revenue. In period 2008/09 the share of domestic indirect tax from GDP was reached 9
percent. The main reason for the high percentage share in2008/09 was the high growth rate of VAT by
56.2 percent on average. Contrary to VAT contribution from GDP, turn over tax had been contributed the
least percentage from GDP on average. From period 2002/03-2008/09 the contribution percentage and
/or ratio of turnover tax from GDP was 0.074 percent (0.00074) in ratios.

This indicates that among others sources of domestic indirect taxes the contribution of TOT was the
least among others. Even if its contribution is low it bring equal and enhance fairness in commercial
relations and makes complete the coverage of tax system.

35
 Figure 3.5 Trends in total direct tax and indirect tax from GDP.

Years.
Source: own computational ERO data.

According to the above figure, the share of direct tax and domestic indirect tax was shown the positive
relationship with the rising of GDP through the study years. From period 1997/98-2002/03 share of direct
tax from GDP is greater than share of indirect tax. However, as it is clearly shown on the above figure the
share of in direct tax is more increased as well as high result than share of direct tax from GDP from period
2003/04 -2008/09.This is due to the proclamation of VAT and TOT that contribute the high amount for the
in direct tax revenue.

36
 In period 2005/06 -2008/09 the gap between the shares of direct taxes and indirect tax to wards the
rising of GDP was become wider. But the contribution of direct tax for the GDP was increased by
increasing rate from year 2003/04 -2008/09.

37
 CHAPTER FOUR

Conclusion and Recommendations

4.1 Conclusion
So far this research attempt was made to shown the contribution of tax revenue for economic growth.
The government raises its revenue through taxation to finance its expenditure. In this study we have able
to examine the structure and trends of government revenue and the relation ship between the tax
revenue and GDP.

Considering the structure of revenue, much of the country’s revenue is obtained through taxes.
Between 199798-2008/09 tax revenue contribute about 7.78 percent (52540.37 million birr in actual)
from GDP and the remaining actual contribution was derived from non tax revenue.

Of tax revenue, the direct tax accounted about 48.5 percent (25492.68 in million birr) on average during
the period of 1997/98 -2008/09 . While indirect tax accounted about 51.5 percent (26942.8 in million
birr). Government tax revenue was increased from 2007.77 million in 1997/98 to 11381.66 million birr in
2008/09. The growth rate of tax revenue in 2008/09 was 42 percent. This growth is the maximum growth
rate of total tax revenue during the period of study. However, the average annual growth rate of tax
revenue is estimated to be 16.4 percent per year.

In the same way, direct tax revenue growth rate was reached its maximum in 2008/09. It registers 42.7
percent growth rate and it shows the minimum growth rate in 2002/03 by falling to -10.5 percent.
Accordingly the share of direct tax from GDP had been increased through the study year. In this case it
contributed around 3.7 percent on average. Regarding with the share of total tax revenue from GDP
during the study period it shows an increasing trend by contributing 7.7percent.

More over , the study confirmed that in 2008/09 growth rate of domestic indirect tax reached its
maximum level of 39.5 percent , on the other hand , domestic indirect tax revenue shows it least growth
rate in 2000/01 by registering -2.8 percent. Similarly the share of total tax from GDP contribution was
reached it maximum contribution in 2008/09 by registering 17 percent on average.

Finally, when we look government tax revenue and economic growth (the share in GDP), it have positive
relation ship .as the economic growth revenue increases from 4.5 percent in 1997/98 to 17 percent in
2008/09. This is because of increase of tax as economy of the refection increases. At last the study

38
confirmers that an increased in tax revenue has tends economic growth by increasing the budgetary
system that facilitates infrastructures for society.

4.2 Recommendations

 The government should give high consideration for capacity building that will able to country’s
revenue bureau to over come the lack of knowledge in the case of collecting tax on time.
 The government should give enough consideration for all source of tax revenue.
 The tax collecting authority should increased the awareness of tax payers in the form of seminars
and arrange program to have a good knowledge and experience about the purpose and use of
taxation.
 The tax collecting authority should encourage business men as they register their business
income to tax department.
 Infrastructure facilities should develop in order to facilitate the tax collection and allocation of
resource on time.
 The government should increase the share of current revenue since it has raising the productive
capacity of the economy.
 In order to raise his budget, government should increase revenue through participation of society
in the way of collecting tax revenue from all sectors on time.
 The government should work towards stabilizing the market to enable the economy generate
consistent tax revenue.
 Since tax encourage economic growth by providing social service, security, improving good
governance and improve living standard of people; the concerned body and every citizens of the
nation should have good awareness about the use of taxation.

39
 The government should wider the tax base by improving the awareness’ of rural people so that
the agricultural sector becomes the back bone of tax revenue too.
 To over come the economic stability during the occurrence of inflation the government should
raise the existing tax base.
 The ministry of revenue should facilitate conditions for the systematic, efficient and timely
collection of government tax revenue and direct their collection.
 The revenue collecting authorities should direct and coordinate the on going tax reform
programs.
 Since tax is the main source of revenue the government should have clear policy and strategy for
tax collection system.
 The government creates the fair relationship between tax collector and tax payers.
 The government should make clear responsibility and burden to wards tax payers.
 The government should have smooth relationship with all tax payers.
 To reduce harm full things on the society, the government should levied heavy taxes on products
which worsen the health of the people.
 The government should change the bad attitude of tax payers by providing them sufficient
educational services.

40
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 Ashetu Chole , Fiscal decentralization in Ethiopia, second edition,1994, Addis Ababa-Ethiopia
 Oromia revenue office ,Introduction to taxation,2009,Addis Ababa-Ethiopia
 GebrieWorku Mengesha, Tax accounting in Ethiopian context, second edition, 2008, Addis
Ababa-Ethiopia.
 Misrak Tesfaye, Ethiopian tax accounting theory and practice,2008, Addis Ababa-Ethiopia
 N.G, Mankiw,C(2000 ),Macro economics, Newyork
 Befekadu Degefa, Ethiopian Economic Association Annual Report,volume1 ,1999/2000, Addis
Ababa-Ethiopia
 Chris Jones Introduction to Business Taxation, 2006.Lexi Nexis UK
 Derrese Degefa, Fiscal Policy I Africans growth in African fiscal decentralization a review of
Ethiopia experience, UNCC, 2003, Addis Ababa.
 Gebrie Worku, Tax Accounting in Ethiopian Context, 2006 ,university College of
Commerse,Addis Ababa

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