Agricultural taxation and economic growth in Ethiopia

In developing country, the pattern of tax revenues and economic growth across countries has become a significant concern recently. Because the tax policy may apply as one of the tools of fiscal policy for viable and long-term sources of revenue becoming as a source of finance for economic growth. Thus, this study investigated tax responsiveness to changes in gross domestic product in Ethiopia for the period 1981 - 2014. It mainly focused on the agricultural tax revenue components: agricultural income tax and land use fee. Personal income tax and business profit income have also analyzed. An understanding and analysis of the level of sensitivity of the other tax revenue to discretionary policy measures and GDP are essential to the formulation of fiscal policy. The trend of the agricultural income tax and land use fee collection are highly inconsistent. The study revealed that the Ethiopian agricultural income tax and land use fee are not buoyant, implying that the growth of the agricultural sector has no statistically significant impact on agricultural income tax buoyancy. However, personal income tax revenue, business profit revenue, and total direct taxes are relatively responsive to changes in non-agricultural GDP.

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 Record created 2017-04-01, last modified 2020-10-28

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