Ethiopia as a low income country has encountered problems ofrnFiscal deficits and limited capacity for tax administration. ThernCountry has been undertaking lots of tax reforms since 1940s asrnOne strategy to deal with these problems. Tax reform, a changernâ€¢rnIn status quae, is needed when the existing tax system isrnDeficient in achieving its objectives revenue adequacy,rnEfficiency, equity and administrative feasibility. This studyrnDiscusses: why tax reforms since 1940s were necessary? When werernSuch reforms carried out? And how were they implemented? UsingrnTime series data, the study also determines tax effort indicesrnBased on aggregative regression approach.rnrnThe analysis suggests that tax reforms in Ethiopia, during thernPast five decades, has largely aimed at increasing revenue, bothrnThrough rate increasing and base broadening, rather thanrnImproving efficiency. And the tax effort indices that tell usrnTo what extent the country was capable of raising tax revenuern. ~rnSuggest that Ethiopia has almost succeeded in exploiting its taxrnBase on the average. This is because tax effort indices forrnDifferent periods were found to be almost unity. And the degreernOf openness of the economy, as measured by the relative size ofrnForeign trade, the level of income, as peroxide by per capitarnIncome and the economic structure particularly the relative sizernOf agriculture, are found to be important factors that determinernThe taxable capacity of the country.