By FAUSTIN RWAMBALI
 

A SIMMERING row over the distribution of revenue between the Tanzania mainland and Zanzibar governments could soon come to a head as Zanzibar presses for an increase from the current 4.5 per cent that was set in 1994 to 10 per cent. 

Currently, 95.5 per cent of the revenue generated from profits made by the Bank of Tanzania, the Tanzania Revenue Authority and other Union government levies, and donor grants, goes to the government in Dare es Salaam.

The pressure to have the Union government give more funds to Zanzibar has been mounting particularly now that Zanzibar is facing a shortfall because its tourism industry has slumped following the US and UK travel advisories.

Tourism is the major source of revenue and employment for the one-million strong population of the Isles.

The EastAfrican has established that Zanzibar is pressing for a new formula for allocating the revenue and the debate is increasingly dominating proceedings in the one-year-old Joint Finance Commission (JFC) appointed in March last year to advise the government on the equitable distribution of revenue. The Commission comprises seven members each from both sides of the Union government.

Commission chairman William Shelukindo said last week that the demand by Zanzibar to have its share of revenue increased had already been brought before his Commission. 

The 4.5 per cent was a temporary measure under an agreement in 1994," he said. "The Commission will look into the whole issue and give its recommendations to the appointing authority.

The current formula was proposed by the International Monetary Fund (IMF), which was concerned about the irregular and unbudgeted disbursement of funds to Zanzibar. There was no formula for allocation of the revenue share. 

The IMF formula considered the geographical size of the two entities, their population and economic and financial positions. Zanzibar has one million people, while the mainland has over 33 million.

The Permanent Secretary at the Zanzibar Treasury, Julian Raphael, told The EastAfrican that the formation of JFC followed consultations between the two governments from 1992-1994. It’s true one of the issues that the JFC will tackle is the 4.5 per cent revenue share to Zanzibar, which some people say is unrealistic and not supported by law, said Mr Raphael.

He said that during the consultations, there were claims and counter-claims from both governments and most of them were genuine. This is what prompted the formation of an independent organ by IMF to look into the claims and come up with a solution, he said. 

Said Mr Raphael, I think the Commission is now organising itself so that it can start working on difficult issues in relation to the revenue of the Union, but as of now, my office is yet to get any feedback from the Commission.

Zanzibar Deputy Attorney General Othman Makungu said the Commission had started its work and one of the approaches it had taken was to receive representations from various people.

What I know is that the Commission is gathering information from experts and one of its roles will be to advise the Union government, but I cannot say if the proposals will be tabled in the National Assembly or the Zanzibar House of Representatives, he said.

Apart from revenue distribution, the Commission is expected to look into areas such as the exclusive economic zone, harbours, foreign aid, natural resources such as oil and minerals, currency, finance and banking, income tax and external debts. Sources said that besides the proposal to raise the revenue sharing from 4.5 per cent to 10 per cent, Zanzibar is also demanding that authority over oil exploration on the Isles remain under its jurisdiction.

Another issue of contention is the composition of the JFC, which according to the 1977 Constitution must consist of not more than seven members each from the mainland and Zanzibar, who shall be appointed by the president of the Union government.

Although under such an arrangement one may say the number of members is equal from both sides –by excluding the chairman – there is a need to have an equal number of members because the chairman may be biased, said a Zanzibari leader. According to the 1977 Constitution of Tanzania, the function of JFC is to analyse the revenue and expenditure arising from, or related to the management of affairs concerning Union matters and to make recommendations to the two governments concerning the contribution and allocation to the two governments.

JFC was formed to keep under constant scrutiny the fiscal system of Tanzania and to resolve financial matters between the two governments.

The Constitution also provides for the Union government to maintain a special account – known as the Joint Finance Account, to be part of the Consolidated Fund of the Union government – into which will be paid all the monies contributed by the two governments.

But the proportions of the contributions are to be determined by the JFC in accordance with the law.

The Commission's secretariat comprises experts from the Tanzania Revenue Authority, the Bank of Tanzania and the Zanzibar Revenue Board.
 

 Comments\Views about this article