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Forbes Croatia
The Flat Tax: Regional Competition for Capital and Jobs Intensifies
Why is Croatia still out of the competition?

Print Edition, April 2011

By Dr. Alvin Rabushka, senior fellow, Hoover Institution at Stanford University, Palo Alto, California and founding leadership board member, Adriatic Institute for Public Policy; and, Natasha Srdoc and Joel Anand Samy, co-founders of Adriatic Institute for Public Policy, Rijeka, Croatia.

Strategic Focus: Economic Growth - Unleashing Free Market Forces
Nov. 5 and 6, 2004 Zagreb, Croatia

The first International Leaders Summit (ILS) began on Friday, Nov. 5 with brief remarks from co-founders Natasha Srdoc-Samy and Joel Anand Samy encouraging leaders of Croatia to focus on economic growth and unleashing free market forces.  The two-day conference commenced with the opening keynote address delivered by John Blundell, Director General of Institute of Economic Affairs, titled: "Waging the War on Ideas."  Discussion times and Q & A breaks during the two day conference were maximized Moderators and Chairmen of ILS Strategic Panels included Dr. Daniel Mitchell, Senior Fellow, The Heritage Foundation, USA; Helen Disney, President, Stockholm Network, UK, Joseph Mohorovic, Former State Legislator, USA; Dr. Alvin Rabushka, Senior Fellow, Hoover Institution, USA and John Willman, Deputy Editor, Financial Times, UK.

Highlights of the ILS:

1.  On Thursday, November 4, 2004 on HRT - Croatian Radio Television state owned media and Croatia's largest television featured ILS Speakers - Dr. Alvin Rabushka (USA), Dr. Dan Mitchell (USA), Dr. Eamonn Butler (UK) on prime time "Otvoreno" with Croatia's State Secretary - Dr. Babic for Economic Strategies (Prime Minister's Office), Nadan Vidosevic (President of the Croatian Chamber of Commerce) and Croatian member of parliament, Mr. Cehok (HSLS).  ILS Speakers promoted free market economy and the rule of law with an emphasis on economic growth - unleashing free market forces.  The public debate focused on tax reform, privatization, limited government and other key topics.

2.   Deputy Prime Minister and Finance Minister of Slovakia, Ivan Miklos shared experiences in his transitional nation and conveyed evidences of how Slovakia is benefiting from implementing the "Flat Tax" and unleashing free market forces in their nation during the keynote lunch address.

  • During the ILS Strategic Session, Deputy Prime Minister Miklos encouraged panelist - Croatia's Finance Minister Suker to embrace free market ideas and to adopt the "Flat Tax" that will benefit Croatian individuals.
  • Significant media exposure through broadcast and print media during Miklos' visit affirmed the importance of free market initiatives that directly impact former communist nations.  Evidences and experiences of other former communist states and how they have benefited over the years by implementing reforms received great attention in Croatia.

3.  Croatia's Prime Minister, Dr. Ivo Sanader; Foreign Minister Dr. Miomir Zuzul; Finance Minister Suker and State Secretary of the Ministry of Economy, Mr. Vrankovic stated their plans for Croatia.  Minister Suker and Assistant Minister Vrankovic were seated on ILS Strategic Panels and were able to hear about the major changes taking place in former communist nations that embraced free market ideas.

4.  Dr. Rabushka, Senior Fellow at Hoover Institution and known as the "Father of Flat Tax" clearly explained the successful initiative that has been implemented in nations of Eastern Europe.  Dr. Rabushka chaired the ILS Strategic Session: "The Role of Tax Policy in Influencing Economic Growth".  The Flat Tax was well received by leaders in business and the media. 

5.  Dr. Daniel Mitchell Senior Fellow, The Heritage Foundation, clearly articulated the significance of limited government, lowering taxes, and relayed examples of what is working in nations experiencing economic growth.  He advocated the importance of tax competition among nations, the rule of law and through one of the ILS Strategic Sessions unveiled the "2004 Index of Economic Freedom", published by The Heritage Foundation/Wall Street Journal.

Dr. Mitchell also delivered an inspiring keynote address on the "Legacy of Ronald Reagan" and the significance of values, character and leadership.  He also stressed the urgency for Croatia to implement reforms in the areas of taxation, to move away from the welfare state mentality and raised concerns regarding the EU regulations that will hurt individual Croatians on the long run.

6.  Dr. Butler, President of Adam Smith Institute (UK) delivered a keynote address and articulated the fundamentals of the "Rule of Law."  Dr. Butler's message was concise and impactful as Croatia's struggles to deal with over 1.5 million court cases back-logged in the system (Croatia's population: 4.4 million).

7.  Dr. Jan Oravec, President of the F. A. Hayek Foundation (Slovakia), stated the experiences of Slovak's leadership boldly implementing economic reforms that transformed the nation and has created the "Tiger of Europe."  Dr. Oravec stated Slovakia's benefits in implementing the "Flat Tax" and reducing bureaucracy and limiting government.  He challenged Minister ?uker on the ILS Strategic Panel to seriously consider free market ideas to bring changes to Croatia.

  • Joseph Mohorovic, former state representative of New Mexico, USA and now serving in Washington, DC, provided examples of how legislators and political leaders benefit from free market think tanks.  Mohorovic shared the examples of how state/regional governments can benefit from free market economy.
  • Martin Chren, Director of F.A. Hayek Foundation, addressed the ILS Session on Labor Law Reform since Croatia's rigid laws and high employee tax burden (100% contributions from salary: $100 dollars wage for person + $100 taxes).
  • Croatian born business leaders Matt Sertic (President of Applied Ceramics, USA) and Antun Duzevic (Bermuda) communicated the need for a favorable economic environment prior to attracting investors who will most likely will reject the notion of doing business in Croatia today.
  • Goran Gazivoda, Deputy CEO of HVB Splitska banka brought up for discussion and review the condensed version of the 55 recommendations prepared by the National Competitiveness Board founded by the Croatian business and political community. The objectives of these recommendations is to improve Croatia's competitiveness. The ILS speakers and Adriatic Institute's Board of Advisors recognized the vagueness of the recommendations and no clear plan of action stemming from National Competitiveness Board.   

8. The first ILS gathered over 80 leaders from business, government, academia and experts and more than a 12 journalists from major media around Croatia covered the ILS. 

During the two-day conference, over 30 students from the University of Zagreb and the University of Rijeka volunteered at the Summit and were introduced to free market ideas.

9.  John Willman (Financial Times), Helen Disney (The Stockholm Network) and Udo Prenzel (DW-TV), panelists on the ILS Strategic Session of Free Media - Economic Reporting stressed the importance of free media, greater transparency in the government arena, proper legal framework so that journalists can report accurately and clearly without the fear of imprisonment and retribution.  Free Media has been a major issue since Croatia slipped in the Corruption Perceived Index through Transparency International's report and also the journalists' report.

10.  ILS Speakers and Advisory Board Members of the Adriatic Institute, Dr. Rabushka, Dr. Mitchell and John Blundell spoke to university students, academia and a few business leaders at the Zagreb School of Economics and Management on November 8, 2004.

11.   The concluding remarks at the Summit delivered by Natasha Srdoc-Samy, President of Croatia's first independent free market think tank affirmed the great need for free market ideas in Croatia that will benefit individuals and empower them to advance positive changes in the former communist state.  Natasha Srdoc Samy and Joel Anand Samy adjourned the first International Leaders Summit and announced next year's Summit - June 2005 in Croatia.

12. The organizers and board of advisors attending the ILS unveiled a detailed report on Friday, December 3, 2004 and presented to the media and leaders of business and government the "ILS -  Seven Strategic Recommendations for Economic Growth to Croatia's Government". 

The ILS was covered by major Croatian broadcast and print media.

Most importantly, the organizers of the ILS express their deep gratitude to speakers, partners, supporters and volunteers that came together in Zagreb thus voluntarily contributing their time, abilities, knowledge and resources to advance free market economy and the rule of law in Croatia!