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Opinion: How the DVLA can drive down the January rush and make money

Thu, 3 Jan 2019 Source: Kobina Aidoo

I am no prophet, but I prophesied that thousands of Ghanaian vehicle owners would throng the Driver and Vehicle Licensing Authority’s (DVLA) offices around the country in January to register their vehicles. I could have prophesied this because it happens every year. So I prophesied this, vehicle owners prophesied it, and DVLA prophesied it—which is what makes it so sad and that DVLA hasn’t solved this problem all these years despite the hundreds of millions the Authority collects each year. And it’s a solvable problem.

First, let’s understand what causes the January rush. People prefer to register their vehicles in the new year because they believe having a licence plate with the new year signals newness and adds value in terms of prestige and resale. Therefore, when vehicles are imported into the country around the last quarter, many owners prefer to wait and register the vehicles the following year. Whether it makes economic sense or not, it is what it is. The effect, however, is that December is slow, and January is overcrowded.

In December 2018, DVLA announced electronic vehicle registration starting at the beginning of 2019, but the Authority seems to be having problems implementing the new regime. While electronic registration will help the vehicle registration system overall, the proposed process as I’ve seen it will still require enough human contact that the problem of overcrowding will remain.

A more effective solution, I submit, is to charge more for vehicles registered earlier in the year and cascade it downward from there. If the normal fee for registering a private car is, say, GH¢400, charge GH¢1,500 on the first business day of January and reduce the fee by GH¢50 each subsequent day until you get to GH¢400. And then in December, reduce the price gradually from GH¢400 until you hit, say, GH¢100 by December 31.

In effect, you even out the traffic to DVLA throughout the year, government makes more money, those who care enough about prestige pay more to be seen to have paid more to register their vehicles in January, and those thinking ahead about resale value figure how much the extra resale value is worth and accordingly decide when to register. In other words, people will choose when to register their vehicle according to their pockets. This approach would also be a more equitable way to raise revenue from the rich than the luxury car tax which has created undue burden on people who were already struggling to maintain old, low-value cars that happen to have engines bigger than 3,000cc.

One risk with this approach is that of DVLA staff extorting even more money from people in late December knowing that if the staff stall, the customers would have to have to pay GH¢1,500 in January. That is where the electronic registration comes in handy. The system can be set up so that when vehicle owners begin the process online, they receive a receipt for that date so that they’re guaranteed they would be charged the fee for that date, but they would also get a plate for that date. With that setup, DVLA staff would have no incentive to intentionally stall registrations in order to extort money. At the same time, vehicle owners would have no incentive to generate a receipt in December for a January registration.

I am sure there are other risks and conditions I haven’t thought about yet, but we have many smart people in this country and we can find solutions to them, or any other problem, if we’re so minded to apply our minds.

Columnist: Kobina Aidoo
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