Registrar General: Wrong Move

Since the Organization for Economic Co-operation and Development asserted that the private sector is the engine of growth, the expression almost assumed the status of a cliché in Ghana, yet the private sector is really hemmed in for sustainable practices. State institutions set up to support the private sector tend to subject the sector to practices that disempower, rather than empower. Sometimes, one wonders if such institutions bombard the private sector with harsh requirements simply to sabotage government’s plans to boost private sector development – employ the teeming masses trapped by vicious poverty.

Business registration in Ghana is a most frustrating experience; even the literate get treated like illiterate. Forms must be filled by an officer of the Department. Regardless of how meticulous an applicant attempts to be, flaws would be detected, and the forms would eventually be filled by an officer. The baffling aspect is that the forms are quite straight-forward. Then there is renewal of registration; this article targets the flat penalty fee of GH ¢350.00 for defaulting businesses.

I just visited the Department in Western Region, where an official showed me a stack of renewal/re-registration forms discarded by business owners who had been upset by the fine. I was informed that all the processes had been taken care of until the payment stage when the businesses were given a bill upped by GH ¢350.00. I asked myself whether the businesses in question would redeem themselves or abandon the registration activity. The question was prompted by this admission from the official: “There is nothing we can do about it” [emphasis mine]. That is the innate statement used not only to distance self from the rigidity that characterises administrative procedures in Ghana, but to also legitimize nauseous bureaucracy which actually pushes back national development. I will explain my point.

The paper utilised in preparing the discarded registration forms alone cost the tax-payer a fortune. Should the businesses involved decide to abandon the processes, a hefty sum from already limited funds would be wasted. The businesses may not suffer, because they would simply register new businesses, in which case, the only loser would be Government – in reality, the tax-payer. The Government is encouraging entrepreneurship in Ghana in a bid to offload some employment responsibilities to the private sector. The recent decision by the Registrar General may imply business shut-down, negating Government’s effort to partner the private sector in boosting existing business. The loss of revenue would hurt the Government badly.

If one believes the official about the Department’s helplessness in the implementation of the directive, then the directive comes from a higher office, so one would logically conclude that Government is sabotaging its own effort in empowering the poor and the youth. My argument is probably incongruous but not impossible, though my respect for this Government sways me from such belief. I am always highly suspicious of the weather and politicians, but I pray that my suspicion remains just that.

In other words, there is a pragmatic solution than the one embarked on by the Registrar General or whoever might be behind that directive. I will never advocate that tax defaulters or exploitative businesses be allowed to go scot-free; however, I am against the idea of the flat penalty fee, for now. I am naïve when it comes to economics, but I know that Government should seize every opportunity to recoup money owed it rather than dissipate funds or close down avenues to funds. What if the penalty was reduced to GH ¢50.00 as a warning against a hefty sum next year? It should be accompanied by intensive public education about honouring taxes and a warning that, henceforth, a pinching penalty awaits businesses which default in registration. If that motivates even half of defaulters to renew on time, imagine the funds that could stream into Government coffers, in addition to legitimizing the statuses of businesses.

There could be categorization of penalties; some businesses are registered but not being operated for various reasons. Such ones should be penalised with a small amount. Of course, if Ghana had a reliable database of residents, it would be easy to determine from income levels whether a business is operational or not. Then the inactive ones could be given the necessary tax relief,

A cross-section of Ghanaians is very ignorant about taxes; they are proud when they evade taxes. Is this not the perfect time to educate the populace about the role of taxes in sustaining the free SHS, the effective implementation and sustainability of the “One District, One Factory Policy”? Is it not about time the populace was educated about the realities of getting to the “Ghana beyond Aid” destination? Indeed, it is time to scream to Ghanaians that international aid and donations are taxes from the contributing nations, and that we are pathetic when we simply squander our funds and scramble for others’ sweat funds? A multi-sectorial approach would be most effective in such sensitization processes.

The fact is that the Registrar General should think beyond penalising businesses; it should focus on law enforcement. Businesses must be renewed annually and taxes filed aside from that filed for Ghana Revenue Authority. That civic responsibility should be drummed home to business owners. In business proposal documents, aspiring business owners are informed that taxes are paid according to income; therefore, businesses enable owners to earn higher income, which translates into higher taxes. In other words, people should know the income implications of setting up businesses. Ghanaian businesses cannot play ignorance forever; the Registrar General should start that sensitization NOW.

The education path might be more effective in turning business owners into willing tax payers than the penalty slapped on them. In the current situation, unscrupulous officers would devise means to help businesses evade the penalty, then collect gratitude money. Once again, the nation loses. My question: Is the Registrar General or the source of the directive willing to be objective about this, adopt a holistic approach or will it maintain its myopic stance, risk alienating businesses and deprive Government of desperately-needed funds?