US Dollar Now Worth 10% More in Cuba
Cuba lifts 10-per-cent tax on US dollars, broadens currency use
HAVANA TIMES – Cuba on Thursday said that it will eliminate a long-standing 10-per-cent tax that it put on the official US dollar exchange rate and accept the use of the greenback in some stores, reported dpa news.
“This is a measure that benefits all Cubans inside and outside the country,” Cuban Economy Minister Alejandro Gil said on state television.
Cuban authorities acknowledged that the decision, designed to bring in more hard currency, was fuelled by the Covid-19 pandemic and the loss of tourist revenue. They stressed that the measure did not represent a “dollarization” of the country’s economy.
The 10-per-cent tax has been in effect since 2004. It ended up promoting an informal parallel market.
From Monday, about 72 of the 4,800 state-controlled stores in Cuba will be able to sell food and toiletries in US dollars, although not in cash but via bank cards connected to US-dollar accounts.
Sales of household appliances and cars had already been offered in the US currency at selected stores since last year, as part of efforts to counter the use of dollars on the ilicit market.
President Miguel Diaz-Canel assured the Council of Ministers that the new measures did not disadvantage the large sector of the Cuban population that does not have access to the dollar.
The sale of products in national currency would go on, promised Diaz-Canel.
That will obviously depend on the mark-up on the products which runs from 150-240% in the normal state/army stores.
Both Cuban currencies have zero or no value on the international markets. Hence the prices on imports were so much more expensive in CUCs vs what you can find in Mexico, Canada or US. Now that you can pay in USD the prices on imported simple consumables should go down and be similar to Mexico in those damn state run stores.
No jay, the Cuban dictatorship assumes that Canadian tourists to Cuba regard themselves as fortunate. There is sound reasoning behind that view.
Some forty years ago, then Prime Minister of Canada Pierre Elliott Trudeau, on a visit to Cuba, presented Fidel Castro with $5 million (quite a lot of money at that time) and a further $5 million loan interest free. (All of it Canadian taxpayers money). When doing so, he gave a speech expounding the virtues of the totalitarian regime and ending:
“Long live Cuba, long live President Fidel Castro.”
Further grovelling admiration was given by Prime Minister Justin Trudeau, son of the above PET, when he wrote to Raul Castro in 2016 following the death of BIG brother Fidel. Justin Trudeau wrote:
“It is with deep sorrow that I learned today of the death of Cuba’s longest serving President.” he continued:
“On behalf of all Canadians, Sophie and I offer our deepest condolences to the family, friends and many, many supporters of Mr. Castro.” there followed:
“I know my father was very proud to call him a friend and I had the opportunity to meet Fidel when my father passed away. It was also a real honour to meet his three sons (actually Fidel had seven and possibly eight by four women) and his brother President Raul Castro during my recent visit to Cuba.”
So jay, in consequence, the Castro regime has sound reason to assume that Canadians consider themselves fortunate to be able to visit and admire the communist totalitarian state. Don’t criticize, be grateful for their hospitality!
Why does it loose so much? Most currencies can be exchanged for a 3% fee. Currently the Canadian dollar is listed at .735 CUC and at .735 USD. Please explain. Thank you..
sometimes cuban leaders FORGET that the most tourists come from Canada. The Canadian dollar loses about 9% on exchange to the cuc!!!!! It’s time for Cuba to respect the Canadian currency.
“They stressed that the measure did not represent a “dollarization” of the country’s economy.”
Ha ha ha. The Cuban people are not stupid. Given the choice between holding stable dollars with worldwide value, or CUC that are accepted only in Cuba and might be supplanted by worthless CUP, which do you think they will choose?
And now the Cuban regime accept the dollars “The imperialist money” in places where the Cuban money is not even accepted. Remember not too long ego you were send to jail for carrying dollars with you. Los pueblos tienen lo que se merecen.
Anti-Imperalist: I don’t believe the US$-CUC rate will be impacted by elimination of the 10% tax as I don’t believe it was ever impacted by it when it existed. Cubans with US dollars have never wanted to go to the bank where there is an official record of them having US dollars in the amount they do. Everything of economic significance is better without the prying eyes of the government. Does the Cuban who gets a fistful of dollars then buys CUC so they can buy a house for the US relative but in the Cuban’s name want the government to know? Does the Cuban who buys dollars from the dealer to travel overseas to buy merchandise that they then clandestinely sell from their back bedroom want the government to know what they are doing?
The original reason for the 10% tax was a protest against the US government for not allowing the Cuban embassy to have a bank account in the US. But the reason they eliminated the 10% tax was very obvious. They wanted more people to exchange in the cadeca or bank so the US dollars would end up with the Cuban government rather than in the hands of Cuban people. The Cuban government is desperate for foreign currency and this is a way to capture it.
I can’t see where this move will have any substantial impact on availability of goods for purchase or prices. That is already so dramatically impacted by basic economically caused shortages that any impact such as this will be minuscule.
What about the Canadian people who have been helping Cuba for YEARS?
The truth is that the CUC is worth 10% less.
Bob, It will be interesting to see what the new street rate is for the Dollar vs. CUC. Too bad the government hasn’t released any revenue data from the tax on dollars so people might know what its effectiveness was. They kept it up for 16 years, you’d think there was a reason? Another issue will be whether there will be less products available for Cubans without access to foreign currency. President Diaz Canel says the sales in USD will not take away from local currency sales. That remains to be seen.
The headline “US Dollar Now Worth 10% More in Cuba” is based on the erroneous assumption that people actually paid the extra 10% tax in meaningful amounts. About the only ones who paid the 10% were some first time US tourists. Everyone else, including the $3.5 billion in Cubans received as remittances simply used the unofficial dealers who stood outside cadecas exchanging US dollars for CUC at the free market rate which has exceeded 1:1 for years. That rate currently seems to be 110-114 CUC for a US$100 bill.