Burden of Cross Border Contraband Goods Trade on Revenue and Customs Duty Collection and the Challenges to Control it in Ethiopian Revenues and Customs Authority (ERCA). Case of Moyale Branch

Abstract

Citizens pay their taxes (Inland Revenue tax or Customs duty tax) in exchange for public services and goods. At the same time, this exchange legitimates the political equilibrium and the state itself. However, in developing countries the link between the rights and obligations of different actors in paying tax is often weak (Christian Daude, Hamlet Gutiérrez and Ángel Melguizo, 2012). From the above statement and the researcher observations and ERCA annual reports, the researcher observed a gap that, in Ethiopia, the resulting equilibrium is frequently characterized by low levels of tax revenue collection and consequently insufficient public goods and services (in quantity and quality) and there is cross border contraband goods trade controlled market within the country. The study adopted both quantitative and qualitative research approaches and descriptive research methods. Thus, the objective of the study was to look “The Burden of Contraband Goods trade on Revenue and Customs Duty collection And the Challenges to Control It by ERCA. Case of Moyale Branch”. To achieve the objective of the study, the researcher collected both primary and secondary data. Notional price of seized contraband goods of 14years of secondary data was collected from Moyale branch annual reports. And the primary data was collected from 53 randomly selected Customs enforcement officials via distributed hand delivered questionnaires. The collected data was analyzed by both descriptive and inferential statistics. In conclusion, the result indicated that, revenue and customs duty collection potential of the branch failed by 4.478% every year was due to cross border Contraband goods trade/weak controlling activity and there is a challenge to control it mainly, due to many routes at the region which is very difficult to cover by enforcement bodies.

Keywords: Contraband goods, revenue and customs duty,