Abstract:
The study presents the role of domestic revenue to finance government expenditure in Amhara region, Linked with the performance of public measure that are taken at regional level to boost domestic revenue of the region. The study used both primary and secondary data. Based on secondary data on different regional public revenue sources (1997 – 2016) and public measure based on primary data on perceived performance of public measures on boosting domestic revenue, which were collected through formal survey using a pre-tested questionnaire administered with 81 experts of BOFEC and ARA at regional and zonal level. The public measures considered in this study are (i) categorization of tax payers in 2001, (ii) systematic application Taxpayers Identification Number (TIN) in 2004, (iii) hiring of tax intelligence officers in 2010, and (iv) application of the use of cash register machines in 2011. The generated data was analyzed using descriptive analysis (mainly trend analysis and tests of independence) and econometric models (Logit models). The results of the trend analysis clearly show that cumulatively the different public measures have demonstrated an increase in the contribution of the domestic revenue over the years covered. However, the overall contribution of domestic revenue in the total regional public revenue is still low, which is less than 30% of the total regional public revenue. However, the rate of increase in the contribution of domestic revenue to finance regional government expenditure shows increasing trend. The results of logit models identified the key perceived factors for the performance of the four public measures put in place to enhance domestic revenue. In general, the common performance factors were related with (i) the availability of required number of staff with required expertise, (ii) the extent of awareness creation about the different aspects of public revenue sources among the general public in general and key actors like traders, business entities, (iii) Inadequacy of the extent and quality of service provided to taxpayers, (iv) the liability of some of the measures for corruption, and (v) liability for deterrence (non-compliance of tax payers). Thus, it is recommended that these factors are addressed through adequate public policy and development to ensure that domestic revenue will play important role in financing the regional public expenditure.