Tanzania: MPs Demand Review of Union Revenue-Sharing

Nairobi — The dispute over the sharing of revenue between Zanzibar and Tanzania mainland has erupted again with some Members of Parliament calling for a review of the existing arrangement.

The current revenue formula of 4.5 per cent for Zanzibar has been under dispute for years and led to the creation of a Joint Finance Commission in 2003.

Habib Mnyaa, Member for Parliament for Mkanyageni told Finance and Economic Affairs Minister Mustafa Mkulo during the parliamentary session discussing the 2008/09 budget in Dar es Salaam that it is high time the government reworked the formula.

To underline how serious the issue is, the Parliamentary Committee for Finance under the chairmanship of Abdallah Kigoda has told Mr Mkulo that his 2008/09 budget could face hurdles if the issue is not resolved by that time.

Official Opposition parliamentary spokesman and shadow minister for finance Hamad Rashid Mohamed told The EastAfrican last week that the committee has warned Mr Mkulo that the 4.5 per cent revenue sharing formula is outdated and there is an urgent need for a new one.

"Indeed, lack of an appropriate Union revenue sharing formula is against the national constitution which directs putting in place such a formula," he said.

The existing arrangement of sharing grants was proposed by the International Monetary Fund in 1980s. But critics say that since then, the situation in Zanzibar has changed significantly.

Zanzibar feels that it needs to be given a bigger share of the revenues than is the case now, with its MPs frequently raising the issue.

In October 2006, the JFC handed over its report to the then finance minister Zakia Meghji on how contributions, revenues, and costs should be shared between Tanzania Mainland and Zanzibar.

But two years down the line, there has been no change. Gray Mgonja, Permanent Secretary in the Ministry of Finance told The EastAfrican last week that the JFC proposals were submitted to the government for discussion.

"When the two Union members reach complete agreements on such issues, we will let the public know," he said.

Mr Mohamed said the absence of a proper revenue sharing formula stands in the way of the two sides benefiting from such projects as Songo Songo gas fields and the petroleum reserves in Pemba.

JFC, a Union institution created under section 134 of the constitution of the United Republic of Tanzania and the Joint Finance Commission Act of 1996, was inaugurated in June 2003 after former president Benjamin Mkapa appointed seven commissioners.

The commission is tasked with analysing revenues and expenditure emanating from or concerning implementation of Union affairs and proposing to the two governments formulas on contribution and revenue sharing.

The commission is also mandated to investigate activities of the financial system of the union and the financial relationship between the two governments.

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