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Why Zanzibar development spending climbs 44.7percent

Friday June 11 2021
Zanzibar pic

Zanzibar Finance and Planning minister Jamal Kassim Ali displays a labelled briefcase containing Zanzibar’s Budget Speech for 2021/2022 financial year outside the House of Representatives in Unguja, Zanzibar yesterday. PHOTO | ZANZIBAR MINISTRY OF FINANCE

By Gadiosa Lamtey

Dar es Salaam. Zanzibar is raising its development budget by a cool 44.7 percent as President Hussein Ali Mwinyi’s administration seeks to put the country on the right path to achieving its much-touted goal of building a blue economy.

Dr Mwinyi, who was elected Zanzibar’s eighth president last October, argued for the blue economy model as the best way to develop the fortunes of the semi-autonomous archipelago during election campaigns.

The ‘Blue Economy’ concept was first highlighted at the United Nations Conference on Trade and Development (Unctad), held in Rio de Janeiro in Brazil in 2012.

Unctad defines the ‘Blue Economy’ as including economic and trade activities that focus on the ocean-based marine environment, associated biodiversity, ecosystems, species, and genetic resources while ensuring conservation.

Tabling the administration’s maiden budget, broadcast live on various platforms, in the House of Representatives yesterday, Finance and Planning Minister Jamal Kassim Ali said development budget during the 2021/22 financial year will rise by Sh272.9 billion to reach Sh882.8 billion from Sh609.9 billion in the financial year 2020/21.

In total, the government hopes to collect and spend a total of Sh1.829 trillion during the coming financial year, from Sh1.579 trillion during the 2020/21 financial year.

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The Sh882.8 billion development budget will be spent on executing about ten mega projects in line with the blue economy model. These include continuing with preparations for construction of Pemba airport, purchasing four modern fishing vessels and officially beginning the implementation of the Boost Inclusive Growth in Zanzibar (Big-Z) on which some Sh5.7 billion will be spent during the initial stages of preparation.

Others are solar power production and gas projects, implementation of the employment programme for the youth, construction of the a new referral hospital that would constitute a health training college at Binguni, developing professionalism in various fields including oil and gas, engineering, extension services, medicine and science disciplines.

Moreover, among areas on which the government will focus to ensure the budget is implemented are increasing the dividend rate to 50 percent on government agencies.

Mr Ali said in protecting the loss of government revenue from non-receipt, the government proposes to make adjustments in tax procedure and management Code No.7 of 2009 that will increase the penalty rate for businesspersons who will not adhere to issue electronic receipts to Sh2 million per transaction.

“We will also introduce a new system of collecting government revenue for using the electronic system known as ZanMalipo,” said the minister when tabling the budget.

He clarified that the aim of the system would be to reduce loopholes of loss income, reducing collective collection costs and keep transparency in the payment of goods and services of the government.

He said the move was expected to increase revenue of the government in the amount of Sh7.5 billion. Also companies from the Mainland will contribute to the Zanzibar economy by paying Zanzibar income tax. The move is expected to collect a total of Sh2.7 billion. In ensuring the public is relieved of the burden of living, the government in 2021/22, will eliminate Value Added Tax (VAT) on cooking, sugar, iron sheet, steel and cement.

“The government proposes to make adjustments in VAT Act No. 4 of 1998 to remove VAT on cooking oil and sugar. It is the government’s expectation that this step will benefit the people as they would afford in buying such products at a lower prices than how the situation is currently,” he said.

The new Finance Bill will also see the removal of prepayment terms of 25 percent tax in taxation procedures. Before, some taxpayers failed to balance their tax payments to the Revenue Board Zanzibar due to the existence of the legal requirement to pay 25 percent tax before one was allowed to pay in instalments.

Hence, the government proposed to make adjustments in tax administration and management Act No. 7 of 2009 revoke the condition.

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