The Ethiopian Revenue and Customs Authority (ERCA) said its annual income from inland taxes will be over half a trillion Birr by the end of GTP II.

According to the new target revenue, more than 600 billion Birr is expected to be collected from tax and non-tax Inland Revenue sources, with taxes accounting for over 550 billion Birr.

ERCA has collected 116 billion Birr in the last budget year and to make it to its 550 billion Birr target over the next five years, tax collection would have to increase by close to 100 billion Birr every year.

The government has planned to meet the new target revenue through the expansion of its tax base. IMF’s latest report also points to the same recommending that forgone revenue should be minimized with tax incentives and tax revenues used prudently to avoid potential economic distortions. “Rather than providing incentives through tax policy, the government could use these resources to finance infrastructure,” according to IMF’s latest report.

The government’s expenditure is also expected to grow significantly over the GTP II, with total expenditure set to reach 726.1 billion Birr.

Expectations for growth over the GTP II period are high across sectors. Manufacturing’s GTP ratio currently 4.5 percent is expected to reach eight percent by the end of GTP II and 18 percent in 2025. Earnings from industry and exports sector would also be over USD 14 billion.

Source: Capital