An Assessment Of Revenue Generation Capacity In Gambella Region Achievements And Constra Ints

Fiscal deficit is a common characteri sti c of developing countri es. Parti cularl y, SubrnSaharan Afri can co untri es have difficulty in generating revenue to cover thei rrnexpendi tures due to weak tax adm in istration, tax evasion and corruption problem.rnEthiopia also shares this feature of fi scal defi cit, whi ch is always financed throughrnex ternal assistance, and regions usually depend on fed eral grants for their ex penditures.rnFor example, in the year 93/94-97/98 regions co ll ected less than 20% of the nationalrnrevenue, whereas regions accounted from 34 to 44%. of the total expendi ture in thernco untry and they only covered · 25 · to 35% of ·the ir ex penditures from their revenue.rnAmong regions themselves, fi scal capaciti es vary. Some regions generate more thanrnothers do wh ile some regions generate less. Tn 97/98-99/00, the federal grants coveragernranged from 94:36% in Gambe lla to 9.47% in Add is Ababa whi ch implies that Gambellarngenerate less revenue than its expenditure in the country.rnThen the objective of this research is to examine the performance of revenue and revenuerngeneration constraints in the Gambella region from 93/94-04/05. This study is a mi xed ofrnexplanatory and descripti ve researches where secondary and primary c1ata were used. Thernprimary data were collected through depth i nterview a nd focus group discussion fromrnpeople that have experience in tax admini strati O:n. Sonie community lead ers who wererninvolved in tax co ll ection were also interviewed indi viduall y. The research fi ndingsrnshowed that Gambel la region in 00101-04/05 covered only 7.6% of its ex penditure whilern92.4% of its ex penditure is covered by federa l grants. During 00101-04/05 the federalrngrants coverage ranged from 92.36% in Gambella to 98% in Addis Ababa. Hence,rnGambella depends highly on federal grants of all the regions due to low in stituti onalrncapacity, low economic base and poli tical instabi lity.rnIn order for the region to reduce this dependency on federal grants, it should increase itsrnrevenue by alleviating political instabilities in the region; and weaknesses in in sti tu tionrnsuch as weakness in audit, accounting and monitorin g and evaluation systems of revenuerndepartment of the region. Incentives mechani sms for tax payers to pay more tax are alsornneeded to collect more tax in the region.

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