What is public finance in Ethiopia?

What is public finance in Ethiopia?

The word now means, “Plans of government finances submitted for the approval of the legislature”. The budget reflects what the government intends to do. The budget has become the powerful instrument for fulfilling the basic objectives of government. The budget covers all the transactions of the central government.

What is the role of taxation in public finance?

Most importantly, taxation is a major source of government revenue and tax proceeds are used by the government to render their traditional functions such as: provision of good roads, maintenance of law and order, defense against external aggression, regulation of trade and business to ensure social and economic …

What is the role of taxation in Ethiopia?

Taxation is the main source of development finance in most countries. In Ethiopia domestic revenues were more than three times as large as total budget aid in 2010, making it the only real candidate for sustainable development financing in a long-term exit strategy from aid dependency.

How many types of taxes are there in Ethiopia?

two types
In Ethiopia there are two types of tax. These are direct and indirect tax.

What are the objective of public financial management?

The broad objectives of public financial management are to achieve overall fiscal discipline, allocation of resources to priority needs, and efficient and effective allocation of public services.

What is public finance management?

The term “public financial management” commonly describes elements of an annual budget cycle, which typically centers around (1) budget formulation; (2) budget execution; (3) accounting and reporting; and (4) external security and audit. A general consensus exists around the objectives of the PFM system.

How did taxation get started in Ethiopia?

income tax. This was officially introduced to Ethiopia in 1943, although from 1941 to 1943 the income tax policy systematized by the Italians had been in operation. The present income tax system is based on a series of schedules.

What are the main types of taxes in Ethiopia?

The Ethiopian tax law provides for direct and indirect taxes. The direct taxes are divided into five categories: personal income tax, rental tax, withholding tax, business profit tax and other taxes. The main types of indirect taxes applicable are value added tax (VAT), customs duty, excise and turn over taxes.

What are the three types of taxation?

Tax systems in the U.S. fall into three main categories: Regressive, proportional, and progressive.

What is the legal framework of the Ethiopian tax system?

In Ethiopia, the power of taxation has categorized vertically in to two tiers of government as federal exclusive power of taxation and regional exclusive power of taxation. The FDRE constitution comprises a provision that enables the two tiers of government two have concurrent power of taxation.

What are the sources of revenue for the Ethiopian government?

The Ethiopian government revenue is broadly divided into three: tax revenue, non-tax revenue, and capital revenue. •. The tax revenue includes income taxes, VAT, TOT, excise tax, custom duty, and stamp duty.

What are the expenditure assignments in Ethiopia?

• Expenditure Assignment – The federal structure of Ethiopia allocates functions and responsibilities, and hence expenditure, to federal government and regional governments. • Intergovernmental Transfer (subsidy) – Refer to the transfer of money from central government to regional governments. – In Ethiopia the transfer is in the form of subsidy.

What are the different types of assignment in the Ethiopian Constitution?

Expenditure Assignment 3. Intergovernmental Transfer (subsidy) 4. Borrowing 1. Revenue Assignment •. The division of taxation power is a principal aspect of the Constitution that provides the legal framework of the Ethiopian federal system. 4

Why study public finance and taxation?

So, a study of tax is indispensable to the students of Accounting and Finance, which paves ways for knowing about the fundamental principles of taxation. On recognizing the same, the Department of Accounting and Finance, FBE, Addis Ababa University has introduced the Course “Public Finance and Taxation” for the budding Finance students.