History of the Post-War Ethiopian Fiscal System

"The history of raising government revenue during the post-1941 period goes back to March 1942, to the promulgation of Proclamation 8 of 1942'. In the first paragraph of the preamble of that proclamation, the Emperor stated that "in order to accomplish the establishment of Our Government, the prosperity of the country and the well-being of Our People, land taxes shall be levied". Though the laws changed over time, they applied uniformly to all regions of the country and were largely implemented by branch offices of the Ministry of Finance. However, both the magnitude and the composition of revenue collected from the various regions of the country have varied depending on their respective resource bases, economic development, accessibility, and the administrative capacity of the central government itself. In Ethiopia, the allocation of public resources to the various functions of government and to the different regions of the country has so far been decided at the centre. This paper attempts to trace the inter-temporal and regional developments of the Ethiopian fiscal system, to analyze the possible effects of the operation of the public sector on the economy and to present a statistical base for future work along these lines. However, the limited available data have constrained us from presenting a historical review of centre-region fiscal relations during the last five decades. Our analysis of that aspect of the fiscal system is therefore based on ten-year data, spanning 1978/79-1987/88."