Abstract
Due to different factors, federations exhibit significant variation in their respective forms, natures and degrees of decentralization. Regardless of these differences, however, the necessity of a federal covenant, which bestows genuine autonomy on subnational governments, is not contested. Indisputably, a mere constitutional stipulation does not guarantee the financial autonomy of sub-national governments as the latter is influenced by the political economy narratives of a government. Though the fallings of Ethiopian “developmentalism” on the effective functioning of the federal system are multifaceted, this article scrutinizes its impact on the fiscal (tax) autonomy of subnational governments. Looking at the contemporary “developmental-oriented” measures of the federal government vis-a-vis the constitutionally dictated autonomy of regions to generate own-source revenue, the article argues that the fiscal autonomy of subnational governments is highly constrained due to the adoption of the developmental state paradigm.
Highlights
In spite of the ever growing debate on the economic rationale for decentralization, the issue of fiscal federalism has become more of a political issue of self determination than a matter of public welfare (Prud’homme & Shah, How to cite this paper: Yesigat, Z. (2016)
Many agree that federalism was rather the best, perhaps the only measure of the time that was taken for the survival of the country with the view of balancing the forces of unity and diversity (Assefa, 2007; Fasil, 1997)
Some scholars argue that the Developmental State (DS) of Ethiopia is a recent phenomenon introduced in the aftermath of the 2005 popular election (Messay, 2011)
Summary
In spite of the ever growing debate on the economic rationale for decentralization, the issue of fiscal federalism has become more of a political issue of self determination than a matter of public welfare (Prud’homme & Shah, How to cite this paper: Yesigat, Z. (2016). In light of the ideology-structural nexus, a developmental state can be discerned as, “[a] state that puts economic development as the top priority of governmental policy and is able to design effective instruments to promote such a goal” (Bagchi, 2000). Some scholars argue that the Developmental State (DS) of Ethiopia is a recent phenomenon introduced in the aftermath of the 2005 popular election (Messay, 2011). Contrary to this scholarly argument, documents prepared by the government and/or the ruling party invoke the paradigm was one of the reasons for the TPLF split in 2001 (Meles, 2006). The objective of this study is, to scrutinize the nexus of the impact of the developmental state paradigm on the taxation powers and the volumes own-source revenues of regions, together with the trend toward vertical imbalance in the federation
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