| Abstract: | Revenue and Ethiopian economy with the measurement of Gross Domestic Product by comparing with other Taxes revenue likePersonal income tax (PIT), and Business income tax (BIT), Rental income tax (RIT), the Refund practice and the performance of the government in collecting the budgeted VAT.
The study, therefore,attempts to see the contribution of VAT on Ethiopian economy in general andemphases whether VATtax has significant economic contribution than other taxes in particular.It also tried to examine government’s endeavor to collect VAT as plannedsuccessful or notaccordingly, the study collected secondary data of taxes revenue. These data was collected from the Ministry of finance and Economic Development (MoFED), Ethiopian revenue and customs Authority (ERCA), World Bank (WB), and refer written material in the area of tax revenues. The study had thirty three (33) years of Total tax revenue (TTR), Non tax revenue (NTR), Personal income tax (PIT), Business income tax (BIT), Rental income tax (RIT) and real Gross Domestic Product (GDP) except value added tax (VAT). But, because of the recent introduction of VAT to Ethiopia, and to be realistic, the study used twelve (12) years of data of major taxes since 2002/03(introduction year of VAT) to 2013/14. In addition to the secondary data, an interview was employed for collecting the refund practices in Ethiopia. Thestudy analyzed the collected data using descriptive statistics. The finding of the study reveals that as compared with other taxes, Value added tax (VAT) has great contribution to the Total tax revenue and enhanced Ethiopian economy. The analysis also showed as the average ratio of VAT to Total Tax Revenue and GDP was 30.45% and 2.95% respectively. The finding also discloses that the VAT refund practice for articles 7.1 is done well but for the articles 7.2 is not done in according to the theory. The performance of the government in collecting it VAT budget was good for the reviewed period. However, in order to collect additional VAT and other Tax Revenue and see their effect to the Ethiopia Economy, it needs creates good tax awareness to the tax payers, create self-declaration systemand encouraging individuals to receive a receipt, continue of discussion with tax payers about the tax system and have required number and well trained employees who can implement the tax policies properly. |
