The significance of good governance in ensuring effective tax administration in the public sector and enhancing tax collection is an undeniable fact that is generally accepted. Yet, there is scanty empirical evidence on the actual application of the principles of good governance in the structure and operation of public sector institutions and its outcome, particularly in the tax administration system. Hence, purpose of this study is to investigate the measures taken to institutionalize the principles of good governance within the Ethiopian Revenues and Customs Authority (ERCA). More specifically, the study assessed the level of conceptual understanding and commitment to the principles of good governance, measures taken to create ownership of the principles; the extent to which the ERCA put in place organizational policies, standards, strategies and structures to institutionalize good governance, and measures taken to improve human resource capacity to implement the principles of good governance. In terms of scope, the study focuses on the assessment and collection of taxes from category “C” taxpayers in selected sub-city branches of the ERCA. The research is essentially a case study that uses quantitative and qualitative data gathered from primary and secondary sources to inform its findings. The bulk of the data for this study was generated from primary sources namely, the leadership and staff of the ERCA and category ‘c’ taxpayers as clients of the Authority. The study accessed these informants through key informant interviews, knowledge, attitude and perception (KAP) questionnaires and survey questionnaires. The research also utilized secondary sources in the form of documentation on the activities of the ERCA. Secondary data was gathered from both print and electronic sources including academic literature, laws and policies, organizational documents, and the ERCA website. The study found that, while there have been efforts to institutionalize the principles of good governance in the structure and operations of ERCA, these measures have not had the anticipated level of impact felt by the employees and clients of the Authority. This has been expressed in the limited confidence of employees and clients on the limited extent to which good governance principles have been internalized by the Authority, and the inadequate capacity of the Authority to identify and address instances of misconduct and corruption. [...]
Table of Contents
1 INTRODUCTION
1.1 Background
1.2 Statement of the Problem
1.3 Research Questions
1.4 Objectives of the Study
1.4.1 General objective
1.4.2 Specific Objectives
1.5 Significance of the Study
1.5.1 Policy Makers
1.5.2 ERCA
1.5.3 Future Researchers
1.6 Scope and Limitations of the Study
1.6.1 Thematic Focus
1.6.2 Organizational Focus
1.6.3 Geographic Focus
1.7 Organization of the study
2 LITERATURE REVIEW
2.1 Taxation
2.1.1 Concept of Taxation
2.1.2 Tax Reform Trends
2.1.3 Coercive and Consensual Taxation
2.2 Income Tax Assessment
2.2.1 Presumptive Tax System
2.2.2 The Process of Income Tax Assessment
2.2.3 Procedures for Income Tax Assessment
2.3 Good Governance
2.3.1 Principles of Good Governance
2.3.2 Good Governance in the Context of Public Sector
2.4 Taxation and Good Governance
2.4.1 The Role of Good Governance in Taxation and Tax Reform
2.4.2 Contribution of Taxation to Good Governance
2.4.3 Measuring Good Governance in Tax Administration
2.5 Tax Administration in Ethiopia
2.5.1 The Tax Authority
2.5.2 Code of Conduct for Tax Authority Employees
2.5.3 Tax Review and Appeals
2.5.4 Categories of Tax Payers
2.5.5 Tax and Tax Administration Reform
2.5.6 Challenges in Tax Administration
2.6 Conceptual Framework for the Study
3 RESEARCH METHODOLOGY
3.1 The Study Area
3.1.1 Geography
3.1.2 Demography
3.1.3 Economic Activity
3.1.4 The City Administration
3.1.5 Public Finance
3.2 Research Design
3.3 Sources of Data
3.4 Sampling
3.5 Data Collection Methods/Tools
3.5.1 KAP Questionnaire
3.5.2 Survey Questionnaire
3.5.3 Key Informant Interview
3.5.4 Document Review
3.5.5 Research Diary
3.6 Summary of Research Methods and Tools
3.7 Research/Assessment Framework
4 DATA PRESENTATION AND ANALYSIS
4.1 Profile of Respondents
4.2 Common Understanding and Commitment to Good Governance
4.3 Awareness of Policies, Strategies and Guidelines/Standards to Institutionalize Good Governance
4.4 Human Resources Capacity
4.5 Assessment and Collection of Taxes
4.6 Overall Assessment of Good Governance
5 CONCLUSIONS AND RECOMMENDATIONS
5.1 Conclusions
5.2 Recommendations
6 BIBLIOGRAPHY
Research Objectives and Themes
The main objective of this study is to investigate the measures taken by the Ethiopian Revenues and Customs Authority (ERCA) to institutionalize the principles of good governance, with a specific focus on transparency, accountability, and participation in the assessment and collection of taxes from Category 'C' taxpayers in Addis Ababa.
- Conceptual understanding and commitment to good governance among ERCA leadership and staff.
- Effectiveness of organizational policies, standards, and structures in institutionalizing good governance.
- Human resource capacity and development initiatives for implementing good governance principles.
- Tax assessment and collection practices concerning Category 'C' taxpayers.
- Stakeholder engagement and internal control mechanisms within the tax administration.
Excerpt from the Book
1.1 Background
Taxation is central to the current economic development agenda. Taxation is even more important for developing countries and forms an integral part of their development policies. It provides a stable flow of revenue to finance development priorities, such as strengthening physical infrastructure. It is also interwoven with numerous other policy areas, from good governance and formalizing the economy, to spurring growth as well as a determinant factor for the process of international trade and flow of investment. For developing countries, taxation: “provides governments with the funding required to build the infrastructure on which economic development and growth are based; creates an environment in which business is conducted and wealth is created; shapes the way government activities are undertaken; and, plays a central role in domestic resource mobilization”. (Pfister 2009, 5-6)
The impact of taxation on economic development has been a subject of academic and policy discourse for a long time. While the negative impacts of higher taxes on economic growth have to be taken into account, arguments in favor of taxation as a spur for growth are also widely evident. One important objective of taxation, which is often referred to as the oldest ‘revenue objective’ of taxation, is revenue collection to finance public expenditure. The core argument is that “public expenditure can enhance productivity, such as the provision of infrastructure, public education, and health care” and “… taxation provides the means to finance these expenditures and indirectly can contribute to an increase in the growth rate”. (Myles 2007, 5) The revenue generation objective of taxation is particularly important for countries with low levels of industrialization with little or no exportable resources such as oil. (Tanzi and Shome 1992, 50) This has become even more so in the context of greater emphasis on domestic resource mobilization gaining importance during periods of unstable commodity prices, global economic crises and ambitious poverty eradication and economic transformation goals. (Kariuki 2003, 4)
Summary of Chapters
1 INTRODUCTION: Outlines the significance of taxation and good governance, the research problem regarding tax administration in Ethiopia, and the specific study objectives.
2 LITERATURE REVIEW: Reviews conceptual and theoretical frameworks regarding taxation, good governance, and their interlinkage within public sector institutions and tax administrations.
3 RESEARCH METHODOLOGY: Describes the case study approach, study area, data sources, and the methods used to gather and analyze quantitative and qualitative data.
4 DATA PRESENTATION AND ANALYSIS: Presents the empirical findings gathered from KAP and survey questionnaires, analyzing the current state of good governance within the ERCA.
5 CONCLUSIONS AND RECOMMENDATIONS: Summarizes the study’s findings and offers recommendations for improving good governance, human resources, and tax collection practices.
Keywords
Taxation, Tax Administration, Good Governance, Ethiopia, Addis Ababa, Category C Taxpayers, Ethiopian Revenue and Customs Authority, Principles of Good Governance, Transparency, Accountability, Participation, Tax Reform, Tax Assessment, Human Resource Capacity, Public Sector Governance
Frequently Asked Questions
What is the core focus of this research?
The study investigates how the Ethiopian Revenues and Customs Authority (ERCA) adopts and institutionalizes principles of good governance, such as accountability, transparency, and participation, within its tax administration system.
Which tax category is specifically examined?
The study specifically focuses on Category 'C' taxpayers, who are generally small business owners in Addis Ababa that lack formal accounting records and are therefore subject to presumptive tax assessment.
What is the primary research objective?
The primary goal is to assess whether organizational policies and human resource capacities are effectively aligned with good governance principles to improve tax administration and taxpayer services.
What methodology does the study employ?
The research uses a case study approach, combining both quantitative and qualitative data obtained through Knowledge, Attitude and Perception (KAP) questionnaires, survey questionnaires, and key informant interviews.
What are the major themes explored in the main body?
The main body examines the conceptual understanding of good governance, the effectiveness of internal policies, human resource capacity building, and the challenges faced by taxpayers regarding tax assessment fairness.
How is the term "good governance" defined in this context?
It is explored through dimensions such as government effectiveness, regulatory quality, control of corruption, accountability, and the responsiveness of tax authorities to taxpayer needs.
Why are Category 'C' taxpayers central to this problem?
Because they represent a large segment of the taxpayer base and their tax liability is often determined by estimation rather than actual records, making the process highly discretionary and susceptible to issues of fairness and corruption.
What findings relate to staff turnover and capacity?
The research highlights that high staff turnover and a shortage of professional tax experts significantly hamper the authority's ability to maintain institutional memory and provide consistent, quality service.
What does the study suggest for improving communication?
It recommends that the ERCA implement a comprehensive communication and branding strategy to ensure that taxpayers and employees are fully aware of their rights, obligations, and the institutional mechanisms for complaints.
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- Ghetnet Metiku (Autor), Mebrahtu Woldu (Autor), 2016, Assessment of Principles and Practices of Good Governance in Tax Administration, Múnich, GRIN Verlag, https://www.grin.com/document/442422
