Addis Ababa September 18/2019 Ministry of Revenues said it will strengthen the tax mobilization strategy in order to enlarge the tax base and mobilize tax collections.
Revenue collection in Ethiopia has increased significantly after the government implemented tax reforms and tax mobilization to boost resources and took measures that led to remarkable positive results.
In an exclusive interview with Ethiopian News Agency, Ministry Public Relations Director Humi Abajemal said the ministry has achieved a lot in bringing the tax issue to the forefront as a national agenda through effective tax mobilization.
“What the tax reform and our movement did is identify the tax base potential in the country first in order to generate additional tax revenue and create awareness among the business communities through consecutive campaigns. The strategy has borne fruits in maximizing the quantity of tax revenue collected,” she explained.
Following the tax reform, which has been supported by wide-ranging tax mobilization strategies, a change has been ushered in the existing tax collection scale to a new level by gradually meeting the main objective of financing government expenditure and other objectives, according to the director.
The ministry collected 198.1 billion Birr last Ethiopian fiscal year, which ended two months back. The revenue is higher by 22 billion Birr when compared with the previous year.
Noting that the tax movement has become an effective tool, the ministry will underpin this approach, Humi added that “the campaign will be executed as a fundamental means of acquiring more public revenue and raising a new generation of taxpayers who pay taxes voluntarily and on time in accordance with the standing tax regulations and directive.
She stated that this approach will be consolidated in the 2019/20 budget year.
Taking into account that Ethiopia has not been collecting enough tax returns compared to the economy of the country, the ministry has planned to implement a number of initiatives to work together with various stakeholders and taxpayers through the tax mobilization program.
The tax mobilization program is a strategy of awareness creation campaign about the importance of paying government taxes for the development of the country.
Costantinos Berhutesfa, a former senior policy adviser at the United Nations, said the advent of sweeping reforms that were introduced a year ago through the tax movement is laying the foundation for a sustained and modernized tax collection system in Ethiopia.
He added that the nation has embarked on a series of systematic changes in the tax system to raise tax revenues to finance public expenditures as the country has currently initiated a market economy with tax modernization mechanisms.
Costantinos argued that Ethiopia’s tax base is very small when compared with many other developing countries, even with Sub-Saran African countries.
“Basically, the urban sector is taxed; but when you come to the rural sector, it is still not taxed effectively because of different reasons. The World Bank and IMF have been repeatedly urging the government to broaden its tax base,” he noted.
Costantinos urged that Ministry of Revenues needs to have an appropriate economic statistics from the very grassroots level for relevant taxation and to implement the right tax regime, beside the tax movement strategy.