Price Hikes Expected with New Import Taxes

HAVANA TIMES — The increase in taxes on imports that went into effect on Monday will mean an increase in prices on the island, according to statements made to the AP news agency by new business operators on the island.

“This idea of raising taxes is ludicrous. I don’t know where this decision came from because it affects everybody,” said Rafael, a 50-year-old business operator who has been importing clothes to Havana. “But the ones who are going to be affected most by this measure are the people, because we’re going to have to raise the prices we charge them,” he added.

According to the report, others had prepared for the blow by stockpiling goods before the tax took effect.

The Cuban government has sought to expand the private sector, but still lacks wholesale businesses from which companies can buy the parts, raw materials and other needs for the products they sell.

4 thoughts on “Price Hikes Expected with New Import Taxes

  • Hong Kong and Singapore have never had import taxes and are doing very well from shopping tourism and this plan is being copied by many countries.

  • In addition to all the other absurdities of Marxian, state monopoly socialism, the PCC comrades have gone over to the technique of taxing the people at every turn.

    Any tax on business is a tax on the working people. This is because they are automatically and immediately figured into the cost of production, and are necessarily passed down the chain of production to the end consumer. If they could not be passed done in this way, the chain of production would seize up and production would stop.

    Taxes are the way capitalist governments get revenues. Correctly-functioning socialist government would get its revenues not from taxes, but from partial, non-controlling, co-ownership of most significant industry and commerce. For this to work however, such industry and commerce would have to be owned primarily by cooperative working associates on the Mondragon corporation model.

    The thread by which PCC state power is hanging seems to get slimmer each day, as the socialist leadership steps from one bucket of manure to another. Please, comrades, get your heads out of your backsides and go over to a socialist cooperative, state co-ownership republic, before it is too late.

  • But don’t you find it ironic that the Cuban government is slapping such high tariffs on imports while at the same time complaining about the embargo? Now that the embargo is starting to fade (at least the importation of goods is opening up) the Cuban government is indirectly adding to the embargo by raising tariffs.

    By raising tariffs, they take a quick pile of cash, but at the price of slowing economic growth. In the long run, they will lose more than they take. Next month, imports will drop as the cost increases.

    If they really wanted to take in more revenues, they should welcome the imports since they are needed to fuel the new self-employed sector. Tax only those things which Cubans already produce themselves, to protect local industry. This will encourage more economic activity. Then as the self-employed make more money, the government will receive more in income taxes.

    They could also consider a sales tax on CUC transactions as a revenue stream.

  • The most recent and debilitating effect of the US embargo against Cuba is the curtailing of Cuban government access to foreign credit. For example, Cuban food purchases from the US are on a cash-only up-front basis. Sources tell of a severe liquidity crunch facing the Cuban government today. Cuba had generally and successfully dealt with scant resources since the early 1990’s through “robbing Peter to pay Paul” as they say. However, because of the debt crisis in Europe and the crackdown by the US on Euro banks willing to lend to Cuba, Cuban can’t rob Peter anymore because Peter is broke too. Sooooo, measures such as described in this post are necessary to increase the flow of US dollars and Euros into the Cuban treasury. Cuba had hopes of borrowing against oil reserves but literally those hopes dried up with the two failed drillings. Rumors about migration reform include raising Cuban passport and foreign visa fees while eliminating tarjeta blanca fees altogether. The hope is to lower the cost of visits to the country for Cuban exiles while slightly increasing the costs for all other foreigners. All done in the hopes of raising hard currency revenues. Interesting times.

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