ADDIS ABABA- Indirect taxes, VAT, TOT, and Excise tax needs proper usage to realize fair competition among traders and collect more revenue, said scholars and traders.
Dr. Wondaferahu Mulugeta, Assistant Professor at Wolega University told The Ethiopian Herald that, the existence of indirect tax has been significant to reduce inflation and ensure sustainable development in a given country. However, Ethiopia has not been implementing it properly due to various reasons.
According to Wondaferahu, unclear instruction of taxpaying system, lack of due attention by the society, and unfair distribution among others are serious factors challenging tax collection on expected level.
“On the other hand, over taxation has been a common practice without research based collection system. This is a big problem and cause of complain from traders,” he said.
But, the current administration is attempting tax advocating system by using different mechanisms. Although, the action is measurable, it does not mean that everything is completely done, according to Wondaferahu.
Clear tax instruction system, fair distribution, modernizing the taxpaying system and implementing estimate system among others would play crucial role to succeed the intended goal in Ethiopia, he noted.
Edao Abdi, large taxpayer on his part said that, due to the rate is different among indirect taxes, it is significant to consider tax payer capacity. Even though he agrees on the implementation of indirect tax system, there is a big draw back on maintaining the service for tax payers based on their tangible capacity.
As to him, Lack of adequate skilled manpower, the regressive paying system and lack of public awareness are factors which impede to use indirect tax in a proper manner.
“Due to the large number of small and medium taxpayers it is necessary to engage adequate man power to provide them the appropriate service. To achieve the goal, it needs to give rewards to legal tax payers who pay timely, and avoid bureaucratic system across the nation,” he stressed.
Derje Atinafu, from Blayneh Kindie Import-Export on his part said, the existence of indirect tax is significant in a country. Although Ethiopia has indirect taxes system, it is not implemented appropriately, he argued.
As to him, conducive tax paying system and lack of adequate skilled manpower are challenges which are challenging the nation from achieving the expected goals on the sector.
Due to lack of awareness creation, some traders assume that Turn over Tax (ToT) is their own capital, while it belongs to government. On the other hand, the department of credit inspection, which has a mandate to supervise and enforce the traders to pay the tax, has some limitation to its task due to bureaucratic procedures.
Improving the ToT from two percent to 3 or four and modernizing the system could play decisive role in terms of establishing good competition and enables the country to generate better income from tax, Derje underline.
The Ethiopian Herald May 18/ 2019
BY MESERET BEHAILU
