Home > Iván García > New Tariffs in the Regime’s Hunt for Hard Currency

New Tariffs in the Regime’s Hunt for Hard Currency

Advertising sign for a new package delivery service — by ship — from Miami to Havana. Source: Cubacel

When a government’s finances are in the red, everything’s a big rush. So they usually rush to grab the scissors. And butcher public expenditures. Or raise taxes.

Which is what the government of General Raúl Castro is doing. With the difference that the Cuban citizens have miserable salaries, and so they resort to charging fees for money or packages sent by relatives living in other countries, particularly in the U.S..

They do so for several reasons. One, the system designed by Fidel Castro was never able to generate wealth. Another, their deep hatred for emigrants. They see them as traitors. Guys who did not believe in the “Little Father of the Nation” and fled on a raft or plane, to take refuge in the land of their number one enemy.

Fidel Castro, the great culprit of Cuba, borrowed the future of the nation with wars in Africa and preposterous economic plans. So many that it would take more than anthology to compile them.

His brother Raul came in as a relief pitcher. With a financial and economic situation on the brink of decapitalization. Perhaps not the most advisable to rule.

But that’s another story. You already know we live in a real autocracy. In Cuba, the decisions are made by the usual suspects. And those of us down below, as a consolation, we only must accept and applaud.

As anti-American discourse produces no money, no food, no housing and no higher wages, the olive green regime has mounted a full throttle industry around the dollars sent by the “worms” of Florida.

The companies that control the malls or stores in hard currency are all run by the military. It’s the same for the hotels and resorts where Cubans will happily spend the allowance that comes from relatives abroad.

And at what cost. To fill those stores, a closed circuit has been created within the national economy that at the price of gold supplies basic items such as oil, milk powder and tomato puree.

Clearly the intention of the regime is to milk the exiles, because the taxes on these items exceed 240%.

In the fall of 2005, very angry that the Americans caught him swapping old dollar bills in one of his accounts in Switzerland (leading the Swiss bank UBS to end its operations with Cuba in 2007, after paying a huge fine to the United States), Fidel Castro placed a revolutionary tax on 20% on the U.S. dollar.

One morning, during those years, before casting their vote in the shadowy popular elections shadowing put on by the regime, he told foreign reporters that this was one of the ways that his government had to fund the energy revolution and to help poorest.

The Robin Hood theory. That if you really help the poorest, it is welcome. But no. It was another bluff by Castro No. 1. The tax on foreign exchange and sales at shopping malls has not served to fix the streets or repair the 60% of homes in poor conditions in the capital.

Nor has served to make agriculture more efficient. Or raise wages. No one knows exactly where that money ends up. That if we do the shopkeeper’s accounts, roughly, we see that since the dollar was legalized in 1993, in remittances and profits from high prices of the items in the shops for hard currency alone, the figure could reach 35 billion dollars in 19 years.

In this time, they have been created a series of businesses, led by military entrepreneurs financed by the capital from exile. Proceeds rise to the order of two billion annually.

For a poor country like Cuba it’s a lot of money. Concerned, I called the head of TRD Caribe, a corporation that capitalizes most of the shops on the island. I wanted to investigate what is done with the money.

No answer. Attempts to frighten.

“Who are you?” said a guy with the voice of a political commissar.

“Someone who contributes hundreds of dollars monthly to the public purse. I live in Cuba, I’m Cuban and I have a right to know how the money is used that my family sends or that I get for my work as a journalist,” I replied.

A thud, dropping the phone on the other side, they hung up.

Is usual. No answer, no accountability. With this procedure they will only get suspicious. In what suitcases are those earnings stores? Or in what ghost bank accounts have they been deposited?

When a government is not transparent about the income and expenditure of money, you can not think positively about their management. You can throw in the wastebasket everything the Marxists say about capitalist surplus value.

The Cuban state is more voracious than the heartless capitalist entrepreneur. And the party continues. In their eagerness to put dollars in the State’s coffers, they impose a new taxes on packages and goods from abroad.

They don’t care at all about family reunification or alleviating the shortages of many Cuban families through the packages sent by relatives from abroad. They only care about their business. Due to the thousands of individual stalls where they sell all kinds of cheap goods all over the island, sales in state hard currency stores have plummeted.

The reasons, among others, are the high prices and poor quality of the clothing. To curb private sales by the self-employed of goods that are cheaper and better made, they resort to the tax stick.

It is the language they dominate best. They don’t stop to think about making a large reduction in prices of scarce items in the hard currency stores. For example, an obsolete Chinese television, which should already be gone in the world market, sells in the malls for 300 CUC. That’s two year’s pay for an ordinary worker.

If you want to buy a plasma TV you’re going to have to pay between 700 and 1,000 CUC (about $800 to $1200), depending on the inches of your screen. A modern plasma does not exceed $300 in Miami. So, being cheaper, Cubans living in Florida, the vast majority of whom are not rich, choose to send one to their family from there.

Across the pond, the regime responds to this movement of goods with new tax measures that really hurt ordinary Cubans. You should see the tantrums when hard-line Cuban-American politicians or a president like George W. Bush tighten the embargo.

Then they rehearse a speech in defense of the Cuban immigrants who can not travel or send money to their grandmother or their cousins in Cuba. After Carter, no American president has been more flexible with Castro than Barack Obama.

If they thought reasonably, the ideal would be to respond with gestures of goodwill. Not with chimeric demands. Not by applying the blade of tariffs.

Finally, in this diplomatic beat of the Cuban regime with the White House, those who have the greatest interest in keeping the embargo and a state of constant confrontation are the Castro brothers. It is the fuel that sustains them politically. Their only trump card.

From Diario de Cuba.

7 July 2012

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