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WHILE industrialists and others in business have reacted with enthusiasm to the new Government policy to streamline the tax and regulatory environment over the next six months, this policy does not include cutting total tax revenue and skipping essential health, safety and environmental regulations.
The Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, spoke about streamlining rather than abolition.
Properly done, such streamlining should both cut costs of enforcement, and so fees, and make it far easier to set up and run businesses.
A fair slice of restoring competitiveness seems to revolve around making sure the informal sector and many unregulated or dubiously compliant developments are brought into the mainstream, but with the streamline promised.
So far as taxes are concerned, Zimbabwe has a fairly simple tax structure and consequently one that allows fairly low rates.
Generally it is better to have lowish rates that apply universally with very few exemptions, rather than something like the incredibly complex American tax code with thousands of pages of detailed tax code that needs a high-end lawyer and a top accountant for even an individual to make a tax return, let alone a business.
But tax codes tend to be set by those collecting the taxes, and they do not always look at the requirements of those who are paying the taxes.
No one wants to pay taxes, but they should be easy to work out and payment should be a simple and zero-cost process.
Often organisations such as the Confederation of Zimbabwe Industries complain, or make general suggestions, when what would be incredibly useful are some specific suggestions.
This is particularly important in the other section of the proposed streamlining reforms, the regulatory environment and the fees that have to be paid because here there is a great deal that can be done in both simplifying the business environment and cutting costs, especially when we remember that the justification for fees is not to raise money but to cover the costs of enforcing regulations.
An example of a suggestion that is not really helpful is the one that three quarters of regulations should be abolished within a set time-frame. Which regulations?
There are many regulations that are needed, in some form if not in the form they are now presented, but which can create costs for a business.
While they cannot be abolished, they can be combined and streamlined, and that seems to be something where a great deal of progress can be made.
Business in general has mentioned that the number of regulations keeps growing. This can be a natural process as new dangers are found, new processes are created and the like. The problem then appears to be that a new regulation can need a new application and a new inspection and a fee for a new inspector.
Most regulations cover health and safety concerns, and this would include environmental concerns. It would seem that what we need is something like the major combining of processes and the setting of simple standards that if followed do not require anything serious in the way of checks.
An example outside the business world are the Model Building By-Laws that provide a very clear set of standards that can be understood by an ordinary home owner and if followed result in automatic approval without high fees. Deviations require pages of calculations by qualified professionals, who are not cheap.
A streamlined set of essential health and safety regulations, and they cover most of what is essential, would in a similar fashion give a template that if followed would result in automatic approval by a single health and safety inspector on a single visit and with a single and modest fee. Only when deviations were required would a more complex, and costly, process be needed.
Many of these regulations listed together under several Acts of Parliament would require a great deal of thought in their drafting and arrangement, and there would probably have to be more input from the Standards Association for large chunks of the health and safety hardware, so just the final stamps on the equipment would need the practical licensing check as an inspector raced through the premises ticking the boxes.
The other set of essential regulations tend to be the tax regulations, and that brings us back to making sure our tax code is made and kept simple.
The tax code is more open to sloppy growth, since much of it has to be approved in annual Finance Acts and so things can be added easily and quickly.
But again a determination to have a simple template for all tax payments and collections, that if followed would fulfil all requirements, would seem to be a good idea.
Again those wanting to argue in the outer reaches of tax law could pay the higher fees. But most businesses do not have a complex financial structure that needs to move away from a simple template.
There is that split in responsibility between local authorities and central government agencies in many cases, and that can often duplicate the work and double the number of permits, inspectors and fees.
A radical solution would be to combine all requirements from all authorities into the same simple template, working on the ideal of one permit, one inspector and one licence. But it should be possible to be able to split the fees and have a single skilled inspector.
An occasional spring clean of some legislation would be useful to remove things that no longer happen or no longer apply, so we do not keep regulations in place for something that last happened 40 years ago, and these have been known to exist.
Online Reporter