Legality Principle of Taxation in Ethiopia: At the State of Porosity or its Non-Existent from Inception?
25 Pages Posted: 16 Feb 2016
Date Written: February 16, 2016
Legality principle of taxation “no taxation without representation” was founded on the notion of “social contract” whereby people obey the sovereign only if its acts and actions improve their lives and enhance their welfare. This means tax in democracy may be imposed only by act of the legislature which means tax is the product of a collective consent (government). The justification for the advent of long constitutional history of the law of no taxation without representation is due to historical abuses of taxing power of American colonies by England. The reason for emergence of legality principle is manifested as the law of no taxation without representation is the counterpart to the law of exaction.
Legality principle of taxation at its minimum protection is attached to the slogan “no taxation without legislation” and at its maximum or extreme linked to “no delegation of taxation powers whatsoever”. However, in Ethiopia, making inventory of delegation of taxation power for troika organs reveals that there is no mechanism to constrain the extent of delegation such as intelligible principle. The cumulative weight of the evidence of legislation is now overwhelmingly persuasive that legality principle of taxation at its minimum threshold (no taxation without representation) protection is at the state of porosity at best whereas legality principle of taxation at its maximum threshold (no delegation of taxation) is almost non-existent. Liberal delegations coupled with dearth of avenues to challenge the delegation of taxing power have continually put legality principle of taxation on the brink of porosity. This Article argues that the issue of Legality Principle of Taxation is left ajar to derail in Ethiopia.
Keywords: legality principle, delegation, intelligible principle
JEL Classification: K3, K34
Suggested Citation: Suggested Citation