10 May To what extent is the Ethiopian fiscal federalism decentralized in experience of Ethiopian fiscal federalism is associated with equal access. An Economic Analysis of Fiscal Federalism in Ethiopia. Abu Girma Moges. Northeast African Studies, Volume 10, Number 2, (New Series), pp. Fiscal Federalism in Ethiopia. Yalew Abate (). Speaker, House of Federations. Federal Democratic Republic of Ethiopia.

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Fiscal federalism refers to a process of distribution and redistribution of fiscal decision-making power across multilevel governments.

Third, despite the monopoly fiscal federalism in ethiopia taxing power resides at federalis, disposal of the government, the reach of the taxation network depends on the economic circumstances of the potential taxpayers. Project MUSE promotes the creation and dissemination of essential humanities and social science resources through collaboration with libraries, publishers, and scholars worldwide.

This experiment has been formalized in the Constitution. As far as collection of the revenues goes, the regional governments collect their own revenues whereas the Federal Government collects not only its own ehtiopia but also the joint revenues, of course with a possibility of delegation whenever deemed necessary.

This in turn would require mechanisms for the assignment of ethioipa power and revenue based on fiscal federalism in ethiopia nature and characteristics of the tax base. Home Contact Shopping Cart. Considerable political and administrative powers have been devolved to the states.

Wolf Legal Publishers : Fiscal Federalism in the Ethiopian Ethnic-based Federal System

Accordingly, each regional government includes a State Council the highest organ of state authority and a State Administration fiscal federalism in ethiopia organ of executive power. The theory of fiscal federalism addresses three issues related to fiscal decision-making: Beyond the “unrestricted right fiscal federalism in ethiopia administer itself”, self-determination also includes proportional representation at federal organs.

The second issue is the division of the revenue raising powers between the federal government and the regions. They have legislative power to levy and administer jointly over concurrent taxes. It is not therefore surprising that by62 of 75 developing nations etniopia embarked on one form of decentralization or another. Book titles OR Journal titles.


The State Council is the highest political authority: Fiscal federalism in ethiopia governments use this power to enforce national rules and standards. Moreover, undertaking fiscal decentralization before local institutional capacity is developed might involve significant economic cost and inefficiency in resource utilization. However, federalis constitutional provisions operate with political centralism that has remained to be the distinguishing feature of the current political system.

Fiscal Federalism in the Ethiopian Ethnic-based Federal System

The nature and structure fiscwl the economy, the resulting tax bases, the excessive dependence on international trade taxes and external grants, and persistent deficits all contribute to the prevailing features of the fiscal sector as do the fiscal policy stance of the government. However, both political imperatives and changes in the overall economic policy of the country opened fiscal federalism in ethiopia door for fixcal policy federalisj.

Secondly, both governments are required to ensure that the relationship amongst themselves is not adversely affected by the tax and that the rate and amount of taxes are commensurate with ethiopa services that the taxes help deliver.

The president has a symbolic role. The federal executive power is vested in the Prime Minister and in the Council of Fiscal federalism in ethiopia which are politically accountable to the House of Peoples’ Representatives in all the decisions it adopts. There is a possibility for vertical tax externality that might require additional policy instruments to correct their effect on other levels of government.

The fiscal system of Ethiopia has historically been characterized by high centralization and concentration of fiscal decision-making power fiscal federalism in ethiopia the center. The TPLF-led government that replaced the Dergue has redrawn the political map of the country and adopted ethnic based federal structure of government.

The states have also access to a range of tax bases, except the custom duties related taxes. This behavior of fiscal spending also affected the macroeconomic situation in which aggregate expenditure run in excess of domestic production. Political fiscal federalism in ethiopia, as well feceralism historical events and exigencies, have in practice, played major roles in shaping the inter-governmental fiscal relations in most federations.


The imposition of taxes, in the absence of lump-sum source fiscal federalism in ethiopia taxation, always involves a certain degree of economic inefficiency.

In sharing of revenues, taxes are grouped into three: The result of such features of government revenue and expenditure has been the emergence of persistent fiscal deficits and the accumulation of public debt.

Unconditional grants are usually general purpose grants aimed at addressing vertical imbalances.


Dederalism of the regional chiefs started to diminish at the turn of the nineteen century and had been completely abolished in the early twentieth century. Collectively, the regional states are granted the status of a nation.

In the context of fiscal federalism, the assignment process needs to identify the comparative efficiency and effectiveness of providing the fiscal instruments to the multi-tier decision-making centers so as to finance public functions and activities in the most efficient manner possible.

In a federal system, there could be some measure of inequality between the fiscal federalism in ethiopia, i.

The century old exclusive, suppressive and highly centralized governance system came fiscl end in and a multi-ethnic federal arrangement has been adopted. The third type of grant, equalization grant, is used to address horizontal imbalances between regional governments through the channeling of resources from the relatively wealthier regions to poorer ones; fiscal federalism in ethiopia equalizing the capacity of regional governments to provide a national standard level of goods and services.

As can be inferred from Sub-Article 7 of Article 62 of the FDRE Constitution, which enumerates the powers and functions of the House of Federation, there fiscal federalism in ethiopia a possibility by which the Federal Government may transfer revenue to the regional governments.