MALARIA ELIMINATION IN ZANZIBAR - Soper Strategies

which are being explored by the global community, are examined
here as potential solutions to the challenges that Zanzibar will
face in coming years.
Tourism Tax
Generating funding for a health program through taxation is one
form of IFH that is already being tried on a large scale. Taxation
is the basis of the UNITAID model, an international facility
operating since 2006 that uses revenues from an airline ticket tax
to purchase drugs for HIV/AIDS, TB and Malaria. An airline
tax is an attractive funding source because it is based on a steady,
predictable form of revenue and because the tax is progressive—
impacting higher income people the most. Another example of
tax-based financing for health is the “black lung tax,” an excise
tax on the purchase of coal that is used to compensate miners
suffering from black lung disease. A malaria tax would follow
the same principle: just as coal companies generate the burden
of black lung, travelers create the risk of malaria resurgence
and therefore would be required to contribute to the cost of
mitigating that risk through a modest tax.
Both the airline and the black lung taxes are earmarked, meaning
that the revenue they generate is required to go to a specific
purpose (the treatment of ill coal miners in the case of the
latter). Should Zanzibar consider funding its malaria program
partly through taxation, it is essential that this tax be earmarked
and that the purpose is transparent (e.g., by calling it a “malaria
prevention tax”). Earmarked taxes are often criticized because
of the lack of flexibility they impose on public funds—they
prohibit policy-makers from reallocating revenues from the tax
to changing priorities. However, this is precisely the benefit of
such a tax for Zanzibar’s malaria control program. If the revenues
are not earmarked, this source of financing runs the same risks
as traditional funding sources—being diverted from malaria to
other priority programs in response to political pressures. In
order to serve the vital function of preventing malaria resurgence
in Zanzibar, tax revenues must be protected and used exclusively
for this purpose.
A natural opportunity for taxation in Zanzibar is tourism. A
modest tax on airline tickets into Zanzibar could provide a steady,
predictable source of funding for the malaria program and could
be instituted without much risk of a reduction in tourism. The
current taxation of tourism in Zanzibar is quite low ($5) and,
since it is equal for all tourists, is a form of regressive taxation.
A tax on air travel on the other hand would be progressive,
since higher income tourists arrive by plane. We anticipate that
tourists would be willing to pay an additional tax of at least $10
on airline tickets, since: 1) Zanzibar is a highly attractive tourist
destination; 2) this is a very small sum relative to the cost of
traveling to Zanzibar; and 3) maintaining malaria-free status is
in the economic self-interest of travelers. Tourists typically pay
well above $10 for malaria prophylaxis to come to the island.
The home countries of most of Zanzibar’s tourists require a
prescription, and thus a doctor’s visit, for prophylaxis. Tourists
must thus typically pay at least $15-30 for the doctor visit, and
an additional $30 for the medicine—costs that could be avoided
if they were visiting a malaria-free Zanzibar. Thus elimination,
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even with a $10 tax, would be significant net saving for tourists if
they are able to stop taking prophylaxis. Of course, tourists also
planning to visit the mainland on their trip to Zanzibar will still
have to buy prophylaxis, but the substantial number of tourists
coming only to Zanzibar will be able to avoid these costs.
Tourism in Zanzibar has been increasing over the past two
decades, with an especially rapid increase of nearly 100 percent
since 2003. At roughly 130,000 annual tourists (a tiny fraction of
which come from mainland Tanzania), a malaria prevention tax
of, for example, $10 per visitor would provide the ZMCP with
roughly $1.3 million per year. We use the $10 tax for illustrative
purposes only. The actual level of the tax that is optimal for the
ZMCP would depend on more detailed analysis, as should the
form of the tax (e.g., whether it should be flat for all tourists or
on a sliding scale depending on the cost of airline ticket, type of
accommodations, etc.) Also, revenue generated from the tax will
have to go partially toward the cost of administering it, so actual
funding available for malaria activities will be lower than the total
revenue collected.
160,000
140,000
120,000
100,000
FIGURE 32: ANNUAL NUMBER OF TOURISTS IN ZANZIBAR
80,000
60,000
40,000
20,000
0
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1987
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1991
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Annual revenues could be put in a fund and either dispersed
regularly to cover recurring costs of the malaria program (such as
surveillance activities) or kept in an investment fund with good
liquidity and used only when sufficient funds through normal
channels are not available. The latter option is attractive because
it ensures the availability of emergency funds for outbreak
response or when other funding dries up and because it generates
additional interest income. Although a tourist tax for malaria
seems like a natural opportunity for steady, predictable financing
for an attractive tourist destination like Zanzibar, the benefits
and disadvantages of such a tax must be thought through in more
detail. We recommend that, as a next step, the ZMCP and others
conduct a more thorough analysis of a tourist tax for malaria,
considering issues such as feasibility, administrative burden,
revenue potential, etc.