Projects

Current Project

Where the Gap Lay: Presumptive Income Tax Assessment for Micro and Small Enterprises, A Case for Addis Ababa City Administration

Project Researchers: Amanuel Mekonnen, Addis Ababa University & Endalkachew Mulugeta, Addis Ababa University

The study focuses on assessment of presumptive taxation of small and micro enterprise in Addis Ababa City Administration. It will evaluate the standard assessment processes and procedures, the criteria used for assessment, and the equity of taxes imposed by the tax authority. Data will be collected through surveys and interviews.

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Current Project

Perceptions of Value Added Tax Compliance in Ethiopia: Filing and Invoicing

Project Researchers: Gebregziabher G. Tsadik, Ethiopian Revenue and Customs Authority (ERCA), Assefa Gezae, Ethiopian Revenue and Customs Authority (ERCA) & Worku Tamire, Ethiopian Revenue and Customs Authority (ERCA)

VAT, as a consumption tax, can contribute huge amount of tax revenue. But it does not play this role in generating tax revenue in Ethiopia because of low VAT compliance. This can be due to inadequate commitment and capability of tax officials, weak enforcement, low awareness of tax payers, limited application of laws and complex procedures. Therefore, the researchers will use primary and secondary data to assess issues and challenges that affect VAT compliance in three federal tax branches. They will use descriptive method of analysis and based on the findings they will recommend mitigation strategy to enhance VAT compliance.

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Current Project

Practices, challenges and prospects of public sector taxation in Ethiopia

Project Researchers: Sebsbie Fekade , Ethiopian Revenues and Customs Authority (ERCA), Asnakech Lake , Ethiopian Revenues and Customs Authority (ERCA) & Ronald Waiswa, Uganda Revenue Authority

Ethiopia’s revenue collection performance remains low at 12.5% of GDP compared to the average for sub-Saharan Africa (17%). This is partly attributable to the failure of government entities to support tax administration. The public sector is vital in terms of withholding VAT payments and income taxes. However, these institutions experience little pressure from the tax administration to meet their tax obligations. This research will investigate public sector taxation in Ethiopia, employing data matching, comparative studies, textual analysis and interviews.

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Current Project

An Assessment of ERCA’s Taxpayer Education Programs and How They Can be Improved

Project Researchers: Azime A. Hassen, Ethiopian Revenue and Customs Authority (ERCA)

This study aims to evaluate the taxpayer education programs used to aware and educate on the tax knowledge. It may be difficult to shift tax culture without education at an early age or without citizens voluntarily embracing tax payment. So we would like to examine the content and design of mass media in the TV, Radio, national newspapers and training used by the Ethiopian Revenue and Customs Authority (ERCA) to increase awareness, tax filing, and, ultimately, tax compliance. Currently, it consists of education programs using Gebi Lelimat Radio program, Gebi Lelimat TV program, Training and newspaper. The unit of analysis is SMEs which is Category C taxpayers located in the Addis Ababa. The type of data will be the primary and secondary data obtained through a survey. Samples may obtain from a population sample that will be with a multistage method and with random sampling technique.

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Current Project

The Implementation of Presumptive Tax in Ethiopia

Project Researchers: Abis Getachew, Ethiopian Development Research Institute

This study is highly motivated by the recently adjusted rate of the daily presumed income on businesses is the cause of the dispute between the business community and the Ethiopian Revenue and Customs Authority (ERCA). The main goal of introducing the presumptive tax system is to provide tax payers with equitable, efficient, quality services and bringing more firms to the tax net by promoting tax payers to voluntarily discharge their tax obligations.However, when the daily presumed income is estimated the question of fairness and just arisen that led the authority and the business to dispute. The authority claims that the turnover declared by the category “C” businesses is “understated” while the businesses argue that the presumed daily income by the authority is “overstated”. Hence, the researcher is highly interested to study the implementation process of the estimation of the daily income that caused the dispute. In studying the implementation process the case of other African countries will also be reviewed so that Ethiopia can learn from these countries in the region.

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Current Project

Ethiopia’s Double Taxation Avoidance Treaties: A Quest for Policy Guide

Project Researchers: Tesafay Assefa

Ethiopia has undertaken various economic and foreign relations policy reforms especially after the country’s economic shift towards free market economic system since 1991. As part of such multidimensional reforms, the country has undertaken serious of tax reforms especially since 2002. This project aims at examining the policy back up of double taxation treaties in Ethiopia. In dealing with the main issue of the work, data will be collected from the main tax governing organs in Ethiopia, via data collection techniques like interviews, questionnaires, observations and document reviews.

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Current Project

The Role that ICT can Play in Improving Property Tax Collection in Africa: Three Case Studies

Project Researchers: Prof Riël Franzsen, African Tax Institute, Prof William McCluskey, African Tax Institute, Dr Mundia Kabinga, University of Cape Town & Chabala Kasese, Zambia Revenue Authority

Africa is rapidly urbanizing. The number of large African cities with populations between 5 and 10 million is also expected to increase, from three to twelve by 2030 (United Nations 2014). However, the fastest-growing urban agglomerations are medium-sized cities and cities with less than 1 million inhabitants. Durand-Lasserve (2016) provides startling projections regarding urbanization stating that between 2015 and 2050 (i.e., in only 36 years) urbanization in Africa will grow from 38 percent to 55 percent, implying an additional 790 million urban inhabitants. This likely population growth will generate a significant increase in the demand for housing, social services and public utilities. It will also require significant infrastructure investment to support business development and to keep these businesses competitive in international markets. This will likely generate an increased demand for property taxation in African urban areas, and for improving the administration of this tax (McCluskey, Franzsen & Bahl 2017).

Globally local governments are under pressure to deliver basic services to their citizens. To fund amenities such as clean drinking water, waste management, adequate power supply and basic healthcare, sub-national/city administrations are under financial stress. The development of an integrated ICT revenue collection system provides the necessary platform to support municipal administration to more efficiently collect property tax and other own source revenues. Given the rapid rate of urbanization, further stress is experienced in many African cities.

As illustrated by recent developments in a number of Tanzanian cities, the development and implementation of an integrated information and communication technology (ICT) revenue collection system can provide the necessary platform to support municipal administration to more efficiently collect property tax as well as other own source revenues.

The main aim of this project is: To evaluate the contribution of Information Communication Technology to improving the collection of property tax revenue within local government.

To support this aim the following research objectives have been identified:
• To critically evaluate the existing body of knowledge in the context of ICT in own source revenue collection;
• To assess the shortcomings of traditional revenue collection methods with a view to identifying operational gaps;
• To evaluate the performance of ICT solutions in collecting revenue in a number of selected case study areas.

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Past Project

An Analysis of the Relationship Between the State and Councils in Administering the Land Tax in Benin

Project Researchers: Kelly Labart, Bassirou Sarr & Damas Hounsounon

This research is looking into how we can maximise efforts to collect property tax and whether or not councils are better off by delegating this task to tax authorities. If the answer to this question is yes, then ways in which we can encourage the tax authorities to maximise efforts to collect this tax will be addressed. The project with also be looking to uncover the different forms of resistance to the property tax and how these are to be surmounted. What are the political factors in play? How do you ameliorate tax compliance especially with respect to major property owners?

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Understanding the Potential Role of the Property Tax in Addis Ababa

Project Researchers: Gabriella Yolanda Carolini, Fitsum A. Gelaye, Massachusetts Institute of Technology & Tigist K. Temesgen, Addis Ababa University

Urban real estate markets on the African continent are booming with construction and international investment (Bradford, 2014; Davis, 2015; National Association of Realtors, 2016; Salinas, 2013; The Business Year, 2014a, 2014b). A few trends spur this bullish approach to urban Africa real estate. First, demographic estimates for the continent—including urban population growth and the proportion of the youthful population—are widely read as critical indicators of future economic growth (United Nations Economic Commission for Africa, 2017). Africa, along with Asia, hosts the most rapidly urbanizing population – located in small and medium-sized cities, and the continent’s urban population is predicted to triple by 2050 (UN 2015). Second, related to urban population growth, a growing middle class population in a number of countries is expected to boost both demand for services as well as supply, with important consequences for housing and commercial real estate markets (Deloitte, 2011; National Association of Realtors, 2016). Third, from a relative perspective, African luxury real estate in particular is considerably cheaper than other markets in Asia or Latin America (Jansen, 2015), spurring a boom in markets geared toward international investors even while affordable housing for domestic populations remain under-financed (Lall, Henderson, & Venables, 2017). While of course major challenges remain, including the extension and upgrading of critical infrastructure in both urban and rural areas, this picture of urban African real estate markets is increasingly driving international speculation on land and fueling revisions of city futures on the continent (Carolini, 2017; Watson, 2014). This research project seeks to understand how to facilitate wide benefit from this boom in African cities. The central premise of the proposed work is that the distributive potential of Africa’s urban real estate boom depends on the strength of governments to socialize project benefits. Worldwide, the municipal property tax is widely recognized as a critical mechanism that holds the potential to effectively address this distributive challenge.

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Past Project

Maximizing Revenue Generation from an Amnesty Program: Evidence from the Voluntary Asset and Income Declaration Scheme in Nigeria

Project Researchers: Oyebola M. Okunogbe

This project examines how technology and third party information can be harnessed to promote tax compliance in the context of an amnesty program. Nigeria’s ongoing amnesty program, the Voluntary Assets and Income Declaration Scheme (VAIDS) is a time-limited opportunity for taxpayers to declare their previously undeclared assets and income for tax purposes. To avoid moral hazard problems (citizens’ expectation of future amnesties), amnesty programs must be credibly done once. As such, amnesty programs provide a small window of opportunity to collect previously undeclared taxes in exchange for forgiveness of interest and penalties, and it is crucial that the one-time opportunity be maximized. In practice, since it will be impractical to prosecute an extremely large number of persons believed to have been under-declaring or not declaring at all, amnesty programs must rely on voluntary compliance and can achieve this by increasing citizens’ perceptions of the expected costs of non-compliance following the amnesty. In a country like Nigeria where tax liabilities have not been enforced in the past, the challenge is to convince people that coming forward during the amnesty (a certain cost) is better than not coming forward and risking the possibility of enforcement afterwards. This study therefore seeks to assess different ways by which the Nigerian government can increase the perceived risk of enforcement following the amnesty in order to maximize compliance during the amnesty period.

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Past Project

Economic and Political Consequences of Revenue Composition across States in Nigeria

Project Researchers: Oyebola M. Okunogbe

The recent crash in oil prices and subsequent economic crisis has highlighted the grave consequences that are associated with Nigeria’s heavy dependence on oil revenue and its low tax base. While this pattern is well known for the country, there is limited evidence on the state-by-state variation in oil dependence and economic outcomes. This study aims to fill this gap by examining to what extent reliance on oil provides an explanation for the differences in the abilities of states to weather the economic crisis.

Further, there is a growing body of research that that the more dependent a government is on tax revenues, the better the level of public goods it provides. At the same time, increased taxation may stimulate an increased interest and involvement of citizens in the political process, which in turn shapes political institutions and government policy. These two ideas are closely related to the idea of a social contract between government and citizens and this study will seek to shed light on both. This study will provide evidence on how public good provision across states in Nigeria responds to the reliance on taxation relative to oil revenue as well as the extent to which citizens become more politically active.

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