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The Amhara Regional State will seek ways to generate
more revenue after the region's expenditures rose
8-fold over the last 12 years.
The Amhara Regional State has formed a committee to
undertake a study on tax reform before the end of
the fiscal year, according to Demeke Addis, the
region's vice president. The recommendations from
the report will be implemented next year.
The region raised enough revenue to cover 12pc of
its 3.87 billion Br budget in the 2007/2008 budget
year, relying on the federal government for the
remaining 88pc of expenditure.
The Amhara region is one of the fast growing regions
in the country, and cannot solely rely on federal
subsidies to cover its future spending, according to
a source at the Ministry of Finance and Economic
Development's (MoFED). Sooner or later, the region
must be able to build its capacity to collect its
own revenues, the ministry source said.
In the last 12 years, the region's expenditure has
risen more than 8-fold from 454 million Br in 1995.
When the region for the first time took
responsibility for covering its expenses from
revenue generated in the region through the Economic
Development Bureau in 1993, its income was 100.3
million Br.
Although, the region could not fund its desired
expenditure from its own revenue, Demeke points out
that the shortfall is in part due to the region's
economic success.
"In fact we have been registering steady growth at
the regional level since 1993 and as the need for
the development expansion grows on our part, our
financial needs increase, with this, the size of
subsidy from the federal government has grown,"
Demeke told Fortune.
With its 170,000sqkm of landmass, the Amhara
regional state is inhabited by 20 million people.
Since 1993 until the 2006/2007 fiscal year, there
have been 27.11 billion Br worth of investment
registered. Licenses were given to 1,846 projects,
though only 27pc of the project were implemented, a
source from the regional government told Fortune.
The House of Federation allocates federal subsidies
based primarily on regional states' capacity to
collect tax and their level of expenditures. In
fiscal year 2006/07, subsidies from the federal
government were only 9.8 billion Br. This figure
rose to 4.2 billion Br this budget year. The Oromia
Regional State is the largest recipient of federal
subsidies, followed by Amhara.
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