Fiscal Federalism in the Ethiopian Ethnic-based Federal System
Pages: 321 pages
Shipping Weight: 600 gram
ISBN (softcover) : 9789058501899
The post-1991 period witnessed the introduction of an unprecedented political structure in the modern history of Ethiopia. The federal Constitution, which was adopted in December 1994 and came into force in August 1995, is built on the principle of ‘the sovereignty of nations, nationalities and peoples’ as a guiding principle of accommodating diversity and the distribution of powers and responsibilities between the central and regional governments. The Constitution confirmed a new approach towards ethnic diversity by stipulating ethno-linguistic criteria to be the primary basis of the federal structure.
This leads us to the study of the implementation of financial aspects of federalism, in short: fiscal federalism, which examines four interrelated issues: first, the distribution of expenditure responsibilities, which depends on the constitutional division of powers and responsibilities, deals with the issue of ‘who does what’. The second issue is the division of the revenue raising powers between the federal government and the regions. Third, the fiscal imbalances between the tiers of government and the disparities between them in executing their respective responsibilities. Here, the study focuses on the causes and impact of the two kinds of financial imbalances, referred to as vertical and horizontal fiscal imbalances. Fourth, the process of adjusting the imbalances and establishing a meaningful relationship between the tiers of government, both of which are indispensable for a viable federal system.In a federal system, there could be some measure of inequality between the regions, i.e. some could be richer than others.
This study examines not only the regime of fiscal federalism proper in Ethiopia but also seeks to indicate the need to avert the perils of the ethnic-based federal system.