Customs Duties Soar in Cuba

Customs Duties Soar in Cuba/ Yoani Sanchez
Translator: Unstated, Yoani Sanchez

As of Monday, a steep increase in the tariffs on importing goods took
effect in Cuba. Resolution No. 122 of 2012, from the General Customs of
the Republic of Cuba, establishes new fees for shipments to the Island
by air, sea, post, or courier. It also stipulates that these duties will
be paid by Cuban nationals in convertible currency, which is a severe
blow for the residents of the country. The new measure establishes high
tariffs for the entry of certain goods and has provoked strong
discontent among wide sectors of the Cuban population. The articles
affected by the charges range from clothing to toiletries and food, and
even flat-screen TVs and computers. Few goods escape the increase.

The resolution contradicts the government's intent to encourage small
private businesses. For many self-employed workers these imports are a
significant supply source. Every week thousands of pounds of raw
materials, repair parts and appliances arrive on the Island, which end
up in the non-State sector of production and services. They come in
parcels, in the suitcases of Cubans who have been abroad on official
missions, and also with the so-called "mules." These latter are Cubans,
primarily from Miami; emigrants whose trips home are paid for by
agencies who arrange for them to – openly – carry goods for others to
the Island.

Although the Cuban authorities insist that these new tariffs are similar
to those of other countries, the absence of a wholesale market in Cuba
has led many to consider the measure "a huge mistake." The discontent
and confusion have reached a point to where the official media have had
to explain the details over and over. In an article appearing this
Monday in the official newspaper Granma, they offered "some
clarifications about the new rates." Among these, we find that all
products valued between 50.99 pesos (about $2.50 U.S.) and 500.99 pesos
(about $25.00 U.S.) will be charged customs fees to enter the country of
100% of their value. If the traveler does not present a receipt for the
object, then the value will be determined based on the "Customs
Valuation List For Non-Commercial Imports."

Among the objects most in demand by Cubans right now are flat-screen
televisions and washing machines. When maritime shipping began to be
allowed between Florida and Havana last July, these appliances were the
most shipped. The ship "Ana Cecilia" that links the two shores,
transporting parcels sent by exiles, could be seriously affected by the
new customs tariffs.

Self employed are hardest hit

Many Cuban families sustain their domestic economy thanks to parcels
sent from abroad, but it is among the self-employed where this has the
greatest influence. The new General Customs resolution will negatively
impact these emerging entrepreneurs.

In a pizzeria in Central Havana Juan Carlos, the owner, accumulated
imported cheese in his pantry in antici

pation of looming shortages. According to Juan, a good part of the
dishes on his menu are made with Parmesan cheese, grated, packaged and
sent from Florida by his brother. "To buy it here in Cuba in a store
selling in hard currency, I would have to pay triple," he says. But now
the import of that product will raise his costs and he won't have the
profits necessary to ask that it be sent from abroad.

"For now I am planning to increase the prices of everything that uses
ingredients brought by mules." One only has to look at the menu of the
busy restaurant to realize that the prices of many items will soar.
Pasta with pesto now costs the equivalent of about $4.35 U.S., but soon
Juan Carlos will increase it to $5.00. "The customer is going to have to
pay the consequences of this absurd measure," the young entrepreneur
predicts, while overseeing the temperature of an enormous pizza oven.

Not only will it affect food businesses, the new customs duties are
going to be a hard blow to the informal market in clothes and shoes. A
thriving informal network brings in tons of pants, women's blouses,
underwear and shoes from nearby destinations such as Panama, Mexico and
Ecuador. A profitable trade supported especially by counterfeit apparel.

For now, the informal market and self-employment sector are waiting to
see how much damage they'll be caused by the increase in import taxes.
Already some have begun to talk about this possibly being a part of Raul
Castro's "counter-reform."

4 September 2012

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