Agbeyegbe, T., J.G. Stotesky and A. Woldemariam, 2004. Trade liberalization, exchange rate changes, and tax revenue in Sub Saharan Africa. IMF Working Paper 04/178: 1-32.
Aggrey, J., 2013. Determinants of tax revenue: Evidence from Ghana. Master’s Thesis, University of Cape Coast.
Alemayehu, G. and S. Abebe, 2005. Taxes and tax reform in Ethiopia, 1990-2003. United Nations University World Institute for Development Research Paper No. 2005/65.
Ansari, M.M., 1982. Determinants of tax ratio: A cross-country analysis. Economic and Political Weekly, 17(25): 1035-1042.
Basirat, M., F. Aboodi and A. Ahangari, 2014. Analyzing the effect of economic variables on total tax revenues in Iran. Asian Economic and Financial Review, 4(6): 755-767.
Benoit, K., 2011. Linear regression models with logarithmic transformations. London: London School of Economics.
Bhushan, A. and Y. Samy, 2012. Aid and taxation: Is Sub-Saharan Africa different? North South Institute Research Report.
Chaudhry, I.S. and F. Munir, 2010. Determinants of low tax revenue in Pakistan. Pakistan Journal of Social Sciences, 30(2): 439-452.
Chelliah, R.J., 1971. Trends in taxation in developing countries. IMF Staff Papers, 18(2): 254-325.
Crane, S.E. and F. Nourzad, 1986. Inflation and taxation: An empirical analysis. Review of Economics and Statistics, 68(2): 217-223.
Dioda, L., 2012. Structural determinants of tax revenue in Latin America and the Caribbean, 1990-2009. Economic Development Unit, Economic Commission for Latin America and The Caribbean, Sub Regional Headquarters In Mexico.
Emerta, A., 2010. The underground economy and tax evasion in Ethiopia: Implications for tax policy. Macroeconomic Division Ethiopian Economic Policy Research Institute (EEPRI) /Ethiopian Economic Association EEA.
Fatás, A. and I. Mihov, 2003. The case for restricting fiscal policy discretion. Quarterly Journal of Economics Oxford University Press, 118(4): 1419-1447.
Ghani, Z., 2012. A cross country analysis of tax performance with special focus on Pakistan’s tax effort. Master’s Degree Project, Swedish Business School at Orebro University.
Ghura, D., 1998. Tax revenue in Sub-Sahara Africa: Effects of economic policies and corruption. Washington, D.C: International Monetary Fund WP/98/135.
Gupta, A.S., 2007. Determinants of tax revenue efforts in developing countries. International Monetary Fund Working Paper No. 184.
Gupta, A.S., B. Clements, A. Pivovarsky and E.R. Tiongson, 2003. Foreign aid and revenue response: Does the composition of aid matter? IMF Working Paper No. 03/176.
Haque, A., 2009. Determinants of low tax efforts of developing countries. Available from http://sydney.edu.au/law/parsons [Accessed December14,2015].
International Monetary Fund, 2013. The federal democratic republic of Ethiopia, Article IV consultation. IMF Country Report No. 13/308.
Karagöz, K., 2013. Determinants of tax revenue: Does sectorial composition matter? Journal of Finance, Accounting and Management, 4(2): 50-63.
Leothold, T.H., 1991. Tax shares in developing countries: A panel data study. Journal of Development Economics, 35(1): 173-185.
Maddala, G.S., 2001. Introduction to econometrics. 3rd Edn., New York: OHIO State University: John Wiley and Sons Ltd.
Mahdavi, S., 2008. The level and composition of tax revenue in developing countries. International Review of Economics and Finance, 17(4): 607-617.
Ministry of Finance and Economic Development, 2011. Macroeconomic performance on Ethiopian economy. Annual Reports.
Pessino, C. and R. Fenochietto, 2010. Determining countries tax effort. Hacienda Pública Española/Revistade Economía Pública. Instituto de Estudios Fiscales, 195(4): 65-87.
Sinbo and Muibi, 2013. Macroeconomic determinants of tax revenue in Nigeria (1970 - 2011). World Applied Science Journal, 28(1): 27-35.
Stotsky, J.G. and A. WoldeMariam, 1997. Tax effort in Sub-Saharan Africa. IMF Working Paper No. WP/97/107.
Tadele, B., 2013. Analysis of tax buoyancy and its determinants in Ethiopia. Journal of Economics and Sustainable Development, 6(3): 2015.
Tanzi, V., 1989. The impact of macroeconomic policies on the level of taxation and fiscal balance in developing countries. IMF Staff Papers, 36: 633-656.
Tanzi, V. and H.R. Davoodi, 2000. Corruption, growth, and public finance. IMF Working Paper, WP/00/182. Washington, D.C.
Teera, J.M., 2003. Determinants of tax revenue share in Uganda. Centre for Public Economics, Working Paper No. 09b–03.
Tilahun, A., 2014. Determinants of tax compliance behavior in Ethiopia: The case of Bahir Dar city taxpayers. Journal of Economics and Sustainable Development, 5(15): 1-7.
United Nation Development Program, 2013. Global value chains and Africa’s industrialization. African Economic Outlook.
Verbeek, M., 2004. A guide to modern econometrics. 2nd Edn.: Erasmus University Rotterdam. John Wiley & Sons, LTD.
Wawire, N.H.W., 2011. Determinants of value added tax revenue in Kenya. Journal of Finance, Accounting and Management, 4(2): 50-63.
Wilford, S.D. and W.T. Wilford, 1978a. Taxation and economic development: Twelve critical studies. In. Toye, J. F. J (Eds). Estimates of revenue elasticity and buoyancy in central America 1954-1974. London: Frank Cass & Co.Ltd. pp: 83-100.
Wondwosen, W., 2011. The impact of foreign capital inflows on economic growth, savings, and investment in Ethiopia. Master’s Thesis, Addis Ababa University. Addis Ababa.
Worku, G., 2010. Causal links among saving, investment and growth and determinants of saving in Sub-Saharan Africa: Evidence from Ethiopia. Ethiopian Journal of Economics, 19(2): 1—34.
Workineh Ayenew (2016). Determinants of Tax Revenue in Ethiopia (Johansen Co-Integration Approach). International Journal of Business, Economics and Management, 3(6): 69-84. DOI: 10.18488/journal.62/2016.3.6/184.108.40.206
Tax revenue in Ethiopia has been low throughout the study period (1974 to 2013). Tax revenue in Ethiopia was below the average of sub Saharan African countries. The main objective of this study is to empirically examine the major determinants of tax revenue in Ethiopia for the period ranging from 1975-2013, using Johansen maximum likelihood co-integration approach. The result revealed that in the long run real GDP per capita income, foreign aid and industrial value added share of GDP positively and significantly affect tax revenue. However, inflation exerted a negative and significant influence. Whereas, in the short run Real GDP per capita income and inflation have negative effect, whereas industrial Value added share of GDP has positive effect on tax revenue in Ethiopia. The sign of real gross domestic product per capita income is contrary to the priori expectation. Moreover, the coefficients of the lagged error correction term (ECM (-1)) is significant and negative as expected, which imply the existence of economic or government forces that restore the long run equilibrium from short run shocks. Finally, the study recommends measures such as a boost in per capita income growth, structural transformations, introduction of new tax bases and efficient utilization of foreign aid inflow have to be considered by the concerned bodies so as to bring efficient tax administration and enhance revenue growth. Moreover, the government shall give a due recognition to the development of the industrial sector.
This study is one of very few studies which have investigated the relationship between sectoral and macroeconomic variables with tax revenue in Ethiopia. It contributes to the existing literature in the study of tax revenue in Ethiopia. It identifies important determinants of tax revenue using econometric analysis.