BoT: Taxes on tourism boost Z’bar revenues

Dar es Salaam. The August Monthly Economic Review published by the central Bank of Tanzania (BoT) has shown that the isles revenue collections during July were lower than Sh57.5 billion monthly expenditures.

The BoT review has quoted the Zanzibar Ministry of finance reports showing that the major boost to tax revenues was caused by increasing tax collections from tourism activities, as well as taxes on imports.

Tax collections from tourism and its related activities – including hotels, restaurants, tour operator activities, stamp duty, airport and sea ports – grew by almost 100 per cent, to Sh15.2 billion in July this year, higher than the Sh7.9 collected in July last year.

Data from the Zanzibar Commission for Tourism (ZCT) show that the tourism sector contributes 30 per cent of the isles’ economy. About 375,000 tourists visited the isles during the year 2016/17, up from the 162,242 tourists who did so in 2015/16.

According to the isles ministry of tourism, the plan is to increase the number to 500,000 tourist arrivals by the year-2020.

The sector is also leading in many projects, accounting for 60 per cent of all investments projects that generated 220,000 direct jobs.

The sector is seeking to grow by ten per cent by 2020, which will make Zanzibar and Pemba one of the top tourism destinations off the Indian Ocean coast.

The government of Zanzibar has put in place programs that provide proper participation of local community on tourism sectors at several villages. The programs include development and delivery of community-based training in tourism-related skills, and Small and Medium Enterprises (SMEs) program for the respective target groups to create greater economic opportunities within the local tourism industry.

According to a 2016 research on the role and impact of tourism on socio-economic development for Zanzibar published by Issa Shaban Mohammed, a Master’s program student at Mzumbe University, the major challenge for the tourism industry in Zanzibar is that it has been ‘invaded by foreigners.’

This is in the sense that the gains from Zanzibar tourism are taken by people from abroad who decide the manner in which the tourism business is to be conducted...

The research further revealed that most of the foreign tourism companies operating in Zanzibar advise the government on tourism issues but mostly doing so for their interest, with locals manipulated to implement the decisions of the investors.

According to the research, there is a high level of bureaucracy, with the tourism industry in Zanzibar being controlled by too many organizations.

“The organizations have different objectives, so much so that the tourism business is inefficiently operated because every operator has different, private interests,” the author said.

Moreover, many of the tourist attractions in Zanzibar are weak, and no longer attract tourists. Consequently, there has been a considerable decrease in the number of tourists coming to the Space Islands.

Some of the tourist attractions in Zanzibar are aged, and seem to be neglected. For example, the ‘House of Wonders,’ a.k.a as ‘Beiti-ljaibu,’ was for long a prime tourist attraction site. Alas, that is no longer the case nowadays, as it is slowly but steadily going to pieces – thus presenting a danger to visitors.

The second largest tax contributor to government coffers during the month under review was income tax which increased to Sh9.3 billion last July, up from the Sh7.5 billion recorded in July last year.

Income tax revenues were also boosted by increased employees in tourism and related activities.

Value-added tax (VAT) and excise duty generated Sh8.7 billion in July this year, rising from the Sh7.5 billion recorded in July 2016. Non-tax revenues nearly doubled, rising to Sh5.3 billion in July this year, up from the Sh2.9 recorded in July last year.

On the other hand, grants-in-aid shrunk to Sh700 million, down from the Sh3.7 billion recorded last year.