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Zanzibar hits back at Dar over vehicle registration tax

Discussion in 'Jukwaa la Siasa' started by BAK, Apr 14, 2008.

  1. BAK

    BAK JF-Expert Member

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    Zanzibar hits back at Dar over vehicle registration tax

    By WILFRED EDWIN
    THE EAST AFRICAN

    A Tanzanian pedestrian may be a citizen wherever he or she goes in the country, but many Tanzanian motorists will now find themselves treated as foreigners without needing to cross any borders.

    The simmering tensions between the Tanzania mainland and the semi-autonomous Island of Zanzibar have found a bizarre new outlet in the registration of motor vehicles, with the two sides of the Union both treating motor vehicles from the other as foreign-registered.

    It started with the mainland treating Zanzibar-registered motor vehicles as foreign ones by subjecting vehicles entering into the mainland through Zanzibar to 20 per cent import taxes. In retaliation, the Isles government has now decreed that vehicles registered on Tanzania mainland with the “T” ante will need a foreign permit when being driven in Zanzibar unless they are registered afresh with the Island ante numbers.

    The “T” ante motor will also be subjected to payment of other taxes while in Zanzibar.

    The move will affect over 400 motor vehicles out of the current estimated population of 30,000 vehicles on Zanzibar’s roads.

    Rashid Ali Juma, manager for taxpayer services and education at the Zanzibar Revenue Board, told The EastAfrican last week that the motor vehicle registration issue is not covered in the Union matters under the constitution of the United Republic of Tanzania, and as such, the mainland has been treating Zanzibar motor vehicles as foreign ones. Mr Juma said vehicle importers would have the freedom to either re-register their mainland motor vehicles with Zanzibari numbers, or re-export them.

    Under the Zanzibar Registration Act of 2005, any motor vehicle bearing non-Zanzibari registration numbers is a foreign vehicle.

    The registration issue goes back to the Mainland’s move to re-register motor vehicles with new registration numbers with the “T” ante, but excluding Zanzibar on the grounds that the project funds did not cover the Isles.

    According to Mr Juma, Zanzibar needed over $500,000 to meet the new registration costs of its vehicles in the countrywide exercise, “but that was a big sum that we could not afford.”

    The problem was that the money used in the registration project came from donor funding, and Zanzibar, which has no authority to seek donations outside the Union, was not included in the initial estimates of the project.

    Moreover, Zanzibar authorities apparently felt it was unwise to forfeit the “ZNZ” identity to the “T” ante.

    “We would have lost our national identity,” said Mr Juma, adding that three new projects, including the computerisation of driving licences, are being implemented.

    Zanzibar is to computerise vehicle registration number and vehicle plying licences using funds from its own sources.

    Tax administration between the two sides of the United Republic of Tanzania has been constantly difficult, raising sensitivities between their citizens from time to time.

    In the 2007/2008 budget, the Tanzania government introduced a 20 per cent excise duty on importation of used non-utility motor vehicles aged 10 years or more, aimed at discouraging the importation of dilapidated vehicles that have an adverse impact on the environment and incur high maintenance costs.

    The government also amended the annual motor vehicle licence fee charged under the Motor Vehicle Registration and Transfer Tax Act, 1972 from the $20 flat rate to a three-tier structure based on engine capacity.

    The Act, which was supposed to be applicable across the Union, was only applied to the mainland, prompting Zanzibar to maintain its own tax structure.

    On the Tanzania mainland, motor vehicles with an engine capacity not exceeding 1500cc are charged $80 per annum whereas motor vehicles with an engine capacity exceeding 1500cc but not exceeding 5000cc are charged $230. Vehicles with an engine capacity exceeding 5000cc, mostly commercial and other utility vehicles, are charged $100 per annum.

    Two weeks ago, the issue came up for debate in an Isles House of Representatives seminar on tax administration when representatives asked why Zanzibar vehicles with “ZNZ” registration were treated as foreign vehicles on the mainland. But TRA Commissioner General Harry Kitillya said the difficulties in administering vehicle registration between the two sides stem from the differences in tax administration Acts.

    According to the Department of Services and Taxpayers’ Education, there are some taxes that are not payable in Zanzibar, but are payable on the mainland, for instance excise duty, which is not a Union tax, and the destination inspection fees.

    Motor vehicles imported from Zanzibar are subjected to fresh tax assessment as a result of the tax administration differences.

    At the heart of the problem is the fact that the tax exemption law is not applicable to both parties of the Union. Administration of the Union taxes in Zanzibar is under the TRA.

    Union taxes include Customs duty, excise duty on imports and income tax. TRA collects these taxes and remits them to the Zanzibar government.

    The Zanzibar Revenue Board (ZRB), a semi-autonomous tax collection agency of the government of Zanzibar, administers other internal taxes and levies.

    Value Added Tax is the main local tax collected by the ZRB. Other local taxes under the administration of ZRB are the stamp duty, hotel levy, entertainment tax, excise duty on locally manufactured goods and fees from various business licences.

    Between 1999 and 2007, ZRB collections shot up from Tsh900 million ($857,142) to Tsh7 billion ($6,666,000), while TRA collections on the Isles over the period improved from Tsh1 billion ($952,380) to an average of just over Tsh3 billion ($2,857,142).

    Zanzibar says it is the responsibility of TRA to push for reforms to tax laws that hinder smooth operations on both sides of the Union.

    Motor vehicles registered for the first time in Zanzibar are subject to a fee of $100 (Tsh105,000) including taxes, a payment designed to cover the costs associated with registration of the vehicle throughout its life.

    Additional reporting by Mike Mande in Dar es Salaam
     
  2. F

    Fundi Mchundo JF-Expert Member

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    Cutting off your nose to spite your face!
     
  3. Kibunango

    Kibunango JF-Expert Member

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  4. Kibunango

    Kibunango JF-Expert Member

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