Saturday, October 17, 2009

Liberty, democracy, price control and tax competition

SINGAPORE – Liberty is a state of the individual or a collective where there is absence of external coercion in his life or their lives. Democracy does not mean the 51 percent of the population bullying the other 49 percent, but the ability of the minority to protect themselves from being bullied by the majority. Price control is economic coercion by the State dictating upon private enterprises how they should price their products or services, often regardless of the full cost of their cost of production and marketing. And tax competition is a good way to pressure governments not to impose too many and too high taxes on private enterprises as the latter have other alternative places to locate their businesses to.

These four concepts were among those discussed in the two-days (3rd) Pacific Rim Policy Exchange held in Pan Pacific hotel, Singapore, last October 14-15. These definitions may or may not be acceptable to other people, but that is how some speakers and reactors defined those terms during the conference. The event was sponsored by five think tanks: Americans for Tax Reforms (ATR), Property Rights Alliance (PRA), Acton Institute, International Policy Network (IPN) and the World Taxpayers Association (WTA).

Barun Mitra, the founder and director of the Liberty Institute in India, spoke on the first panel, Land reform and Property in the Pacific Rim. His discussions on democracy, property rights and rule of law, has provoked a number of constructive discussions and reactions from the audience. It was good that Barun mentioned that the “smallest minority is the individual”. Thus, bullying by the majority of the minority should be tempered through the promulgation and respect of the rule of law, and the respect of private property rights of the people. Two other speakers, from China and Thailand, spoke on the state of rural development, or underdevelopment, of their respective countries, and the pathways to overcome those hurdles to rural poverty.

I spoke on the second panel, Access to Medicines, and my paper was entitled “Access to medicines through politics: a preliminary assessment of the drug price control policy in the Philippines”. I explained that heavy politics, more than rational consultation with the affected players in the local health sector, was the main reason for the declaration of price control. Because of this, the policy has produced predominantly negative effects to certain private players in the sector (pharma companies, both multinational and local, drugstores, hospitals, pharmacists, physicians, and so on). The short-term effect to patients is of course positive as they will be able to save on certain drug prices, but the long-term effect will be negative: patients in the country may be deprived of more effective, more powerful drugs that are initially sold at higher prices as producers of these more revolutionary drugs will be scared of government confiscation of the success of innovation. The second speaker in the panel was Philip Stevens of IPN, who spoke on their recent paper, “Keeping it real: Combating the threats of fake drugs in poor countries”. Philip’s presentation attracted lots of discussions because of the gravity of the problem at the global level.

The third panel was on International Intellectual Property Challenges, and the speakers were from the Institute for Public Affairs in Australia, and from Philip Morris Hong Kong. Issues tackled by the speakers ranged from parallel imports of books, IPR issues like compulsory licensing for emission-cutting technologies, among others.

On the second day, the fourth panel was an exciting one, about International Tax Competition. One of the speakers, Daniel Mitchell of Cato, USA, fluently emphasized the importance of tax competition among countries. Economies that impose the least tax burden, both in low tax rate and simple procedures to comply, all other things being equal, are attracting more investments, that create more jobs, that promote more economic development among its people. Two other speakers, Sinclair Davidson from Australia, and Peter Wong of the Lion Rock Institute in Hong Kong, equally lauded the importance of tax competition, the “tax havens” and the economic growth that they encourage.

Panel number five was on Removing Barriers to Trade, and 3 good friends were the speakers. Chris Derry of Waycross Partners, USA, Wan Saiful Wan Jan of Malaysia Think Tank, and Alec van Gelder of the IPN, UK. Chris showed examples how they pressure the state government of Kentucky towards more transparency, the fantastic growth in traffic volume of their website. Wan discussed the dilemma of an independent, non-partisan think tank that promotes free trade and free market or liberal economic policies, in dealing with a government that is generally liberal in economic outlook but has unpopular political practices like crackdown on opposition. Alec discussed the development in the Freedom to Trade (F2T) global campaign, how many countries turn protectionist as they grapple with the global economic crisis, though there are some good news like countries proceeding with trade liberalization via bilateral arrangements.

The last panel was a discussion on efforts to Replace Income Taxes by Consumption Taxes. All the 3 panel speakers and moderator were again, my friends from recent years. The moderator was the Sec. Gen. of the WTA, Bjorn Tarras-Wahlberg. The 3 panel speakers were the heads of 3 of the biggest taxpayers’ associations in Asia: Japanese for Tax Reforms (JTR), Korea Taxpayers Association (KTA) and Momentum 107 of Hong Kong. Mr. You of JTR said that at current 5 percent VAT, it is possible for the Japanese government to abolish personal income tax and get the same overall tax revenues by raising VAT to 12.5 percent. Mr. Kim of KTA discussed the philosophical and practical possibility of moving away from income taxation to VAT or consumption taxation. Raymond Ho of Momentum 107 showed pictures of the dozens of events they conducted to pressure the Hong Kong government to stick to its Resolution 107, which states that expenditures cannot increase if they are not covered by sufficient revenues, a move for persistent balanced budget.

The conference also featured two dinner speakers, William McGurn of News Corporation on day one, and Dr. Iftekhar Chowdhury, head of the Institute for South Asian Studies, Singapore on the last day. ATR President, Grover Norquist, was the lunch speaker on day 1 while a new documentary on climate alarmism, “Not Evil, Just Wrong”, was shown on the lunch of the second day.

In addition to the various panel discussions and dinner or lunch talks, the networking and small group discussions among participants proved to be very effective in clarifying certain things and issues, and in forging some organizational alliances and partnerships.

As more governments become bigger and more statist, resulting in the usurpation of more individual rights to collective and government rights, the fight to assert individual liberty, personal responsibility, the rule of law and limited government becomes even more pressing.

The Pacific Rim Policy Exchange is now on its 3rd annual event. It is becoming a consistent big forum for independent think tanks and institutes from countries across the four continents around the Pacific Ocean. Lessons from the economic might of North American countries, from the roaring dragon economies of East Asia, among others, are subjects that continue to be probed by this important international event, the annual Pacific Rim Policy Exchange. I am very thankful to the main sponsors of this event, for the opportunity to attend the past 3 conferences, and even to present a paper and discuss one aspect of big government folly like price control in the Philippines.

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