Unguja. Zanzibar’s government on Thursday unveiled a TSh6.98 trillion ($2.69 billion) budget for 2025/26, sharply expanding spending as it targets stronger growth, higher domestic revenue, and new tax reforms.
The new budget represents a 34.7% increase from the current year’s TSh5.18 trillion. Authorities aim to fuel inclusive growth, boost industrialization, improve energy access, and strengthen environmental protection.
"In the 2025/26 financial year, total government revenue is estimated to reach Sh6.98 trillion, an increase of Sh1.79 trillion compared to the 2024/25 budget," Finance and Planning Minister Dr. Saada Mkuya Salum told lawmakers.
Of the total, TSh2.39 trillion is projected from domestic sources, TSh2.78 trillion from domestic and external borrowing, and TSh1.44 trillion from grants.
Economic growth is forecast at 7.3% in 2025, up from 7.1% this year, driven by fiscal discipline, stable energy prices, and tourism gains.
"We project a 12.6 percent increase in tourist arrivals from 736,755 in 2024 to 829,929 in 2025," Dr. Mkuya said.
The budget has expanded rapidly in recent years, rising 228% from TSh1.57 trillion in 2020/21. Development spending alone has grown fivefold to TSh3.27 trillion.
“Our increased allocations reflect not only expanded service delivery but also the confidence of our development partners,” Dr. Mkuya said, citing $1.79 billion (TSh4.88 trillion) in external support secured over four years.
Domestic revenue has grown 172.8% since 2020/21, while development project spending surged 558%.
To widen the tax base, new levies will target imports of bottled water, eggs, soft drinks, sweets, non-woven plastic bags, disposable plastic items, and flavoured hookah.
"Despite a 120 percent excise duty imposed last year, use of sheesha remains widespread, particularly among the youth," Dr. Mkuya said.
The new excise duty will charge Sh28,232 per kilogramme, aiming both to curb consumption and raise Sh1.27 billion for health funding.
Environmental and road infrastructure funding will see new revenue streams. The government plans to raise the road licence fee from Sh38 to Sh100 per litre on imported fuel and double the road fund levy to Sh200 per litre.
A six-month tax amnesty is proposed for taxpayers from July 1 to December 31, waiving penalties and interest if principal debts are cleared.
"Under this arrangement, taxpayers registered with TRA and ZRA will pay the principal tax due and be granted a 100 percent waiver on penalties and interest," Dr. Mkuya said.
Customs valuation rates will also be updated, with a 25% rise on select imports such as steel, cement, tiles, spirits, wine, and vehicles to reflect current market realities.
"This update is intended to broaden the tax base and ensure fair contribution from imports relative to local production," Dr. Mkuya said.
In addition, the Zanzibar Revenue Authority will expand its mandate to collect non-tax revenue, potentially adding TSh7.57 billion in 2025/26.
Lawmakers will now scrutinize the proposals before final approval.