THE NEW V.A.T. CHARGES: AMBUSH LEGISLATION OR SIMPLY A REACTIONARY INDUSTRY?

vat-registration-2As it turns out, one of the fundamental steps in the legislative process is consultation. That is, the lawmaker should, as much as practicable, solicit the views of all stakeholders on the law she seeks to pass. This consultation is not only required when the process reaches the Committee Stage in the house of parliament. It should also be done at the policy formulation stage, even before the initiator of the bill, cabinet, puts it out. This also means that every law ought to be a product of some policy, whether economic, social, political, etc. This is because laws are not ends in themselves. Their importance lies in the social, economic, political, etc. good they are seek to serve.

The advantages of this consultation requirement are many. Through consultation, the lawmaker gains a better understanding of the social, political, economic, etc. problem she seeks to solve with the law. Consultation also serves as a way of educating those who will be affected by the law – the citizen. They will know the effect and the requirements of the proposed ‘law’ even before it is passed. This even facilitates enforcement or implementation of the law. Above all, one key element of democracy (and we’re touted as a leading democracy in Africa) is participation. Citizens must be offered the opportunity to, as much as practicable, participate directly in the democratic process, the core of which is the law-making process. So, if nothing at all, the citizen has the right to know beforehand about the laws that would affect her life.

My point here is not to say that every citizen should be consulted before every single law is passed. What I’m saying is that where a law has the potential of directly affecting the finances of the average citizen, then, the policy that gives birth to the bill and the resulting law should be put on a broader consultation table. In other words, this culture of people waking up in the morning only to be told that their lives are going to be adversely affected by a law is not a sign of rule of law, good governance or democracy. And it’s neither enough to say that the people’s representatives – Parliament – passed the law. There’re civil society organisations and other pressure groups (and there’re a myriad of them these days), which could be consulted on a broad range of issues. Another important platform for consultation or at least prior education is the media, formal and social (and there’re also a lot of them these days). There is therefore very little excuse for these ambush legislations.

This, the government, is however only one side of the problem. The more dangerous side of the problem is what I’ll invariably call industry. By industry, I mean those for-profit institutions whose very survival depends on the size of citizen’s pocket. So we may have the banking industry, the insurance industry, the food and beverage industry, the transportation and aviation industry, etc.

Industry must be responsive (perhaps, ‘responsible’ would be a better word here). Industry must be responsible. Every organization knows or ought to know that it operates within an environment. This environment is not just commercial. It is also legal. It’s therefore the duty of a legal agent or department of every organization to be very conscious of the organisation’s legal environment. The legal environment is not limited to the laws that regulates the organization as a body. It also include those laws that directly or indirectly affect its clients, suppliers, creditors, owners, competitors, partners, etc. The legal environment also cuts across the past, present and, most importantly, the future. An organisation or industry which doesn’t want to die by dusk must be interested in the present legal environment, and even more interested in its future legal environment. As a matter of necessity, it must not just be interested in simply knowing the future, it must actually be desirous of influencing it.

The advantages of an organization’s legal consciousness with respect to the present needs no further elaboration. Neither does the past. What, perhaps, needs a little more highlighting is the consciousness of the legal environment’s future and how to influence it to its advantage. Every organization has, or ought to have what some management specialist call VMOSA (Vision, Mission, Objectives, Strategies, and Action Plans). There are other variation of this formula. What VMOSA or any of its derivatives seek to achieve is, basically, to whip the rank and file of the organisational structure into the mood of continuously looking into the future.

Contrary to what some legal experts may say, the legal agent or department is a part of the genetic makeup of the organisation, and is certainly no exception to VMOSA. What I’m saying is that the legal department of an organisation is not external to the organisation’s structure. A discussion of the importance of law to an organization, no matter how small, cannot be contained in this space. Suffice it, however, to say that an organization that doesn’t take its legal environment, past, present and, most importantly, future, seriously could be said to be on a suicide mission.

So elsewhere, organizations or industries make it their primary business to be conducting reconnaissance exercise around the exit of cabinet. This is to ensure that no policy that is likely to affect their interests will be discussed without their input. They also have their ears planted around the house of parliament, to ensure that no law is passed without their knowledge that affects their interest. Such reconnaissance exercises is even more imperative in a polity where extensive legislative consultation is evidently wanting.

Having clarified myself to the best of my ability, may I now turn me to the matter that triggered this rather lengthy monologue.

Just a couple of days ago, the entire country woke to the news that a law has been passed, which has the effect of taxing as much as 17.5% of some (not all) of our bank transactions. The tumultuous reaction of the public, including reports of panic withdrawals, would easily lead one to conclude that the law was just flashed through parliament the previous day. On the contrary, the law – Act 870 – was passed and assented to by the President over 4 month earlier. The citizens’ reaction worried me, not because I expect us to be calm. But because we, as it appeared, didn’t know anything about such a law before the day of reckoning.

What however, troubled me most was the fact that the banking industry too was not in any better position. They were also surprised, probably more surprised, by the announcement. As usual they took to what they enjoy doing most – sending emails and SMSs to the equally perplexed customer. The first sentence of one of the emails reads: “The Ghana Revenue Authority (GRA) has brought to our attention the impending imposition of Value Added Tax (VAT) on fees or commissions paid for financial services.” A clear admission that they (the bank), in fact, didn’t know about the law until it was “brought” to their attention.

This event may show that the government has not done a sufficiently broad consultation during the law making process; they didn’t do so during the policy formulation stage and certainly not during the parliamentary stage. But it also shows that the entire banking industry, the nerve of our economy and development, wasn’t legally conscious. If they ever were interested in their legal environment at all, they’re not minded of its future; and it would be superfluous for me to say that they weren’t interested in influencing it. They simply sat down, invested their hands into the warm space between their thighs, clasped the thighs together and then watch and wait.

But that is not even the saddest part of the story. The customer, just like the citizen, would whine uncontrollably for about 13 or 11 seconds and then everything goes back to normalcy. The bank will simply send a message, like the one I quoted above, to the helpless customer; and then another message, a memo, to its IT guys to simply recalibrate their systems. Within a matter of 13 to 11 seconds, 17.5% of money will start moving directly from the customer’s bank account right into some huge dark bottomless thing called the Consolidated Fund, where its onward journey would make you want to vomit.

Be that as it may, the bottom line is that the banking industry in not alone in this. Most (if not all) industries are simply reactionary. As a matter of fact, the government too is not alone. We’re all actively involved in it. Maybe that’s why our whines don’t exceed 13 to 11 seconds.