Four contentious Union issues resolved, government tells House

Dar es Salaam. The government has worked on the four of the eight union contentious matters impeding smooth operations between Mainland and Isles, it was revealed yesterday in Parliament.

The issues that have been worked on include complaints by Zanzibar traders on double taxation, and the Revolutionary Government of Zanzibar not benefiting from Pay-As-You Earn (Paye) from employees of the Union Institutions, and withholding tax paid by the companies registered in Mainland and have subsidiaries in the Isles.

Others are increase in the costs of electricity sold by Tanzania National Electric Supply Company (Tanesco) to Zanzibar Electricity Corporation (Zeco), and delays in the loan signing agreement between the Union government and Exim Bank of China for financing the construction of Abeid Amani Karume International Airport Terminal 3.

Tabling the Sh54.1 billion budget proposal for his ministry, Minister responsible for Environment and Union Matters Selemani Jafo said there was no double taxation.

Complaints about double taxation on the imports was just a misunderstanding of traders, Mr Jafo expounded.

The roots of complaints were differences in the estimates of import value and import duty between Tanzania Mainland and Zanzibar.

This, according to Zanzibar traders, forced them to embrace double taxation of products from the Isles to the Mainland’s market.

However, Mr Jafo said what was being paid by Zanzibar traders in their imports shipped to Mainland could not be translated into double taxation, but a tax difference that remained uncollected in Zanzibar due to differences in imports valuation.

“We have already cleared the air and this is now well understood by Zanzibar’s traders,” said Mr Jafo.

On withholding tax, the Union government and Zanzibar had agreed to amend the Tax Administration Act Section 438 and Income Tax Act Section 332 through the Finance Act No.5 of 2022 so that the companies registered in Mainland but having branches in Zanzibar must pay the withholding tax.

In the same vain, Mr Jafo said it was agreed to continue dishing out Sh1.75 billion to Zanzibar every month as the payment of Paye.

Speaking about delays in signing the agreement between the Union government and Exim Bank for financing the terminal three airport in Zanzibar, he said it was fuelled by a condition that required the country to put its assets as collateral for the loan.

“This contentious issue was resolved after the Revolutionary Government of Zanzibar and Exim Bank agreed to lift that condition and thus paving a room for the loan agreement being signed on November 3, 2022.

About high costs of electricity, Mr Jafo said it was attributed to escalation in the production and distribution costs.

After the negotiation between the two governments, he said, the proposal by Zeco to purchase electricity at Sh130 per unit was agreed.

Now, working on the four unresolved union contentious matters impeding smooth operations between Mainland and Isles, tops the list of the government’s priority for the 2023/24 Financial Year.

The pending matters include the proposal for the Joint Finance Commission, shipping sugar to the mainland market and registration of automobiles.

The list of priorities also includes distribution of revenue sourced from the Revolutionary Government of Zanzibar’s shares in the defunct East African Currency Board, and from the Bank of Tanzania (BoT)’s profit.

ACT-Wazalendo said in a statement availed to the media yesterday that pending contentious issues were being fuelled by lack of true political will to address the same.

“The union between Zanzibar and Mainland lacks constitutional and legal procedures for addressing contentious issues,” reads a part of the statement.

The Parliamentary Standing Committee on Governance, Constitution and Legal Affairs yesterday expressed the need for regular education on the importance and benefits of the Union.

The committee also called on the government to make an evaluation on the ratio of public servants between the two governments to see whether there is fair distribution of the same.