Equity Potentials for Tax Reform in Ethiopia

Abstract

In order to analyze the issue of equity potentials for tax reform in Ethiopia, this paper makes use of Household Income. Consumption, and Expenditure Survey data to derive concentration curves for one direct tax and commodity taxes for six goods and a service as well as the Lorenz Curve of Expenditures. The findings indicate that reforming the tax system in such a way as to reduce taxes on food items and salt while compensating the revenue loss by increased collection from the personal income tax and taxes on sugar and telecommunication services may improve social welfare.