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The Ethiopian Revenue and Customs Authority (ERCA) began the process of undergoing an administrative restructuring, according to the latest information that Capital obtained from ERCA.
“A committee has been formed to undertake a study,” Fasika Belay, Deputy Public Relations head of ERCA, told Capital.
“The structural revision will allow the authority to make the new administration more modern and efficient,” Fasika added.
Abraham Nigussie, Deputy Director of ERCA is leading the operation.
“We will give more information about the study and the implementation of the new structure when the right time comes,” he told Capital.
Currently ERCA only has 53.7 percent of the 14,157 staff it needs. In Addis Ababa the Agency has 61 percent of the 7,344 employees it requires.
Economic changes are a major imputes for looking at how the Authority is managed.
“The country has expanded industrial parks and there have been other major changes. This will help accelerate trade and investment activity in the country,” experts said.
Meanwhile the revenue body has huge a responsibility to collect more revenue as the economy grows.
Staff turnover has been a huge problem for the Agency. Even though ERCA has been hiring many fresh graduates every year, many leave for jobs here and abroad when they get better opportunities.
For instance in the 2016/17 budget year, ERCA hired 447 new graduates and 1,369 other employees.
Duties at the Authority are sensitive and the market is looking for tax specialists with experience at the Authority, according to an expert.
To alleviate the challenge and keep experienced staff ERCA has been applied different mechanisms including increasing salary. Last year ERCA doubled pay for many employees.
According to Fasika, in the past budget year less employees have left.
Last fiscal year ERCA planned to collect 173.1 billion birr from federal tax and customs sources but the actual performance was 135.5 billion birr. Fasika said that this is 78.3 percent of what they hoped for. From their total revenue 57.2 percent comes from inland taxes and 42.73 percent is collected from customs and non tax sources. Lottery sales make up 0.07 percent of their income. Collection in Addis Ababa was 23.25 billion birr, while the plan was 26 billion birr. City revenue grew by 10.2 percent compared with the preceding year’s performance.
In the past few years ERCA was able to perform close to projections but recently that has not been the case.
ERCA officials say that they are trying to address issues which include implementing audited accrued taxes, making faster decisions on tax claims to speed up revenue collection, following up on receipt issuance, and increasing awareness among tax payers.
“When cargo is stored longer than expected at dry ports it takes us more time to collect revenue,” Fasika said.
The tax collection compared with neighboring countries and the economy is very small, according to experts and international organizations like the International Monetary Fund (IMF). The government wants to increase the percentage of tax revenue to 18 percent of GDP in 2020, from the current 13 percent.
ERCA was formed in 2008 when the Ministry of Revenue, Ethiopian Customs Authority and the Federal Inland Revenue Authority merged. Since 2011 it has collected revenue for the Addis Ababa City Administration.