New tax in Cuba threatens consumption in a hungry nation

New tax in Cuba threatens consumption in a hungry nation
By Carlos Batista | AFP – 18 hrs ago

Cuba has slapped a new customs tax on everyday goods shipped from
overseas in a drive that experts say could weaken the economy and sap
consumption.

The levy took effect Monday and is payable in foreign currency. It
targets goods imported by private citizens, often self-employed people
who have started up businesses as part of timid reforms undertaken by
the communist government in 2011.

Carmen Arias, deputy director of the customs service, said the taxes
are "a way to counter this non-commercial means of personal
enrichment."

But economist Mauricio de Miranda disagrees, calling the measure
disproportionate and saying it could act as "a self-imposed embargo
with a damaging effect on people's living standards."

He was alluding to the trade embargo that the United States placed on
Cuba half a century ago, after Fidel Castro came to power.

In Cuba, where the economy is 90 percent controlled by the state,
hundreds of packages and parcels arrive every day, sent by exiled
Cubans to their families back home or brought in by travelers who make
a profit by reselling the merchandise.

Under the new measure, merchandise is taxed at the rate of 10 dollars
a kilo after the first three kilos. Foodstuffs -- exempted from such
taxes after hurricanes hit Cuba in 2008 -- are also taxed now.

That's bad news for privately owned restaurants which, in the absence
of a wholesale market in Cuba, relied on such shipments for products
they cannot find within Cuba.

The new tax "could seriously raise prices of imported consumer goods,
the supply of which is scant in the retail trade network," said de
Miranda, of the Pontifical Xaverian University in Cali, Colombia.

In other countries this kind of levy is imposed to protect local
producers. But in Cuba "there is no need to protect any national
producer, as the consumer goods industry is incapable of meeting local
demand."

"If the idea is to discourage the black market and get people to go to
state-run stores, these stores would have to be sufficiently stocked
at affordable prices," movie-maker Eduardo del Llano wrote in his blog
eduardodelllano.wordpress.com. The average Cuban earns less than 20
dollars a month.

For the past few years, the website www.revolico.com has offered those
few Cubans with access to Internet a veritable bounty of goods
imported tax-free by private citizens and resold at prices below those
found on the official Cuban market.

"It is true that goods sent from overseas have often replaced the
local market, to the detriment of the state and its stores, which are
poorly supplied or empty", said Cuban journalist Giselle Morales
(cubaprofunda.wordpress.com).

But most of the beneficiaries of this kind of parallel trade are
"workers or retirees, whose needs exiled relatives try to meet with
shipments of goods that most Cubans receive with relief," Morales
says.

http://news.yahoo.com/tax-cuba-threatens-consumption-hungry-nation-184303818.html