Revista Internacional de Investigación Contable

Abstracto

FACTORS AFFACTING TAX REVENUE IN ETHIOPIA

Minyichel Baye Degefe Duressa

The purpose of this paper is to analyze the factors that affect revenues from taxes by the revenue government. The main objective of this study is to explore the factors affecting tax revenue in Ethiopia by using a secondary data and multiple variables regression model. Tax revenue may be affected by various factors such as inflation, unemployment, tax rates, level of actual income exchange rate and foreign direct investment. A number of studies have been done in Ethiopia as far as tax revenue is concerned but still not effective to test all factors thus the study was meant to identify factors affect tax revenue in Ethiopia. The research approaches adopted in this thesis include collections of series data set that consists of seventeen years. The time period covered was 1999/00 to 2015/16. Secondary data were collected, coded and entered into Statistical Package for Social Sciences (SPSS, Version 20.0) for regression analysis. The findings from this research provide evidence that, inflation rate regression result shows negative significant, foreign direct investment in billions of birr shows negative significant, disposal income in billions of birr positive and significant, exchange rate has negative significant, unemployment rate have negative insignificant impact on tax revenue. The main conclusions drawn from this study are inflation rate, foreign direct investment; disposal income and exchange rate have significant impact on tax collection. Unemployment rate is insignificant variables affecting tax revenue. The study also provides recommendations that the policy makers come with policies to control the inflation rate in Ethiopia as it negatively affects tax revenue, the government to take care should be taken when attracting FDI to Ethiopia and it should be directed to more manufacture sectors of the economy; lobby for higher employee salaries since this will further contribute to higher tax revenue and Policies makers should undertake reduce unemployment by improved geographical mobility, stricter benefit requirements, Improve labor and Employment subsidies.