The World Bank has granted 11 million birr to facilitate an investigation into the national revenue potential of Ethiopia. The study was commissioned by the Ethiopian Revenues and Customs Authority (ERCA).

The study will assess the revenue productivity of each tax, identify gaps in the law and how to address them as well as widening the tax base on the national level. It will be part of the tax reform instituted by the government to generate mechanisms of increasing the tax-GDP ratio.

The investigation will show the amount of money that is circulating in the economy allowing tax collection to on the basis of tangible data to avoid debate according to an official from ERCA.

The study is also expected to indicate the tax compliance rate allowing ERCA to formulate a broad based compliance framework said Sisay Baharu, Director of Change Implementation Management Directorate for ERCA.

ERCA cancelled an international tender for a similar study two years ago because the offers that resulted proved to be too expensive. The new study will be financed through the Public Sector Capacity Building Program PSCPP of the World Bank.

Similar attempts to assess the tax revenue potential of limited areas have been made in the past. Notable amongst this is the study in the revenue potential of Addis Ababa undertaken by the Ernst & Young international auditing firm for the Addis Ababa Revenues Authority last year.

A study of the revenue potential of the Southern Regional take is also underway under the auspices of the Ethiopian Economic Association.

Source: Addis Fortune