On the Sale of Automobiles in Cuba (Part III)
HAVANA TIMES — On December 31, 2013, a Special Issue of Cuba’s Official Gazette published a Decree-Law issued by the Council of State, another decree approved by the Council of Ministers and three resolutions from the Ministries of Economy and Planning, Finances and Prices and Transportation.
Council of Ministers Decree No. 320 announced the elimination of “restrictions and administrative authorizations” and authorization for “the purchase of automobiles, and their essential parts, through dealerships, at retail prices similar to those offered individuals in the market.”
It sounds nice on paper, no? Let’s have a look at the first blunder: it strikes as rather outlandish that the State and ministries involved in this decision should regulate prices that have been set in the black market.
In this contest between the State and the black market, what happens to the population? That could go into a song, considering “population” rhymes with “speculation.” If the measure had an actual logic behind it, it would at least try to set down the prices that actually exist in the informal market right now.
What similarity is there between the prices established by the State and those that exist in the black market? What standard of measure was used? What kind of research was done? What sector did they focus on?
After Decree 292, which authorized individuals to sell and transfer ownership over vehicles, came into effect, people began to search for alternatives to pay lower taxes. Since contracts between buyers and sellers were legalized before public notaries, these individuals rarely declared the actual amount of the transaction.
Therefore, if the standard of measure was established by reviewing the deeds drawn up during the sale and purchase of these automobiles, where do current State prices come from?
If anyone is to profit from these measures, it is precisely those individuals who purchase and sell cars. Black market prices will rise. People will continue to sell and buy cars there (as very few will be able to afford dealership prices). As for the majority, they won’t be able to buy a car anywhere.
The Gazette adds: “(…) additional income taken in through sales in the vehicle market, including those secured through taxes, will be destined to a fund aimed at financing the development of public transportation, a priority that is to benefit the population.”
This has prompted innumerable comments which often strike us as jokes but are in fact very serious, like the ones below, which I’ve taken from Cuba’s official government web-site Cubadebate.
“Let’s see how many cars they actually sell with those inflated prices.”
“This is so people will see they are now actually selling cars, not to actually sell any cars.”
“This is like giving a kid some candy and then taking it away. Those prices are insane. People will continue to buy cars in the black market.”
“A new, standard Mercedes Benz shouldn’t cost more than US $80,000. How could they set these prices, even for second-hand cars? Can we buy these cars on credit?
“On credit? How do you suggest they collect money from the dead?”
“As of this year, buses will have air conditioning and even a snack bar.”
“Whoever buys one of these cars should be considered a true patriot, because, you have to want public transportation in Cuba to improve with all your heart to pay that amount of money for a car!”
And there are plenty more of such comments. Of Cuba’s fledgling car market, we can conclude what the old saying tells us: “Not everything that shines is gold.”