Thursday, July 19, 2012

Cuba’s Customs Office Tightens the Screws

Cuba's Customs Office Tightens the Screws
July 18, 2012
Fernando Ravsberg*

HAVANA TIMES — The Customs law that goes into effect in September is one
that will have the most social impact, since in one way or another it
will affect the majority of Cubans, making everyday life a little more
difficult and a lot more expensive.

"Luisa" assured me that if the government raises customs tariffs, her
business will collapse since all of her merchandise is brought over here
from Ecuador. (I don't want to give her real name because the license
only authorizes her to sell clothes that she makes herself.)

At present, official Cuban commerce is practically stagnant since many
people opt for the parallel import market, which has better products at
lower prices, with everything from washing machines to deodorant,
including catalog sales from Miami.

The new Customs Law will significantly raise taxes on these imported
goods and will also limit the quantity. Therefore the expectation is
that shipments through "mules" will be dramatically reduced, as will
parcels disguised as family assistance.


Cubans residing in the country pay their customs duties in pesos. The
new law will maintain the payment in pesos for residents but only on
their first trip in any one year; after that, the duty will be paid in
CUCs – a convertible currency that is 24 times more expensive.

When it comes to clothes and shoes from their second trip, only 30 kg
per passenger will be exempt, the rest will require payments of $10 USD
per kg. This rate will apply regardless of what the traveler has already
paid the airline for luggage transport costs.

Parcel shipments will also be limited. This is a means through which
TVs, refrigerators, washing machines and even tools, toasters, juicers,
irons and deep fryers have been brought in — from Panama and Miami — for
sale to the new self-employed workers.
This year the state again started collecting customs duties on people
bringing in food, which had been exempt from taxes since 2008, the year
when Cuba was hit by three hurricanes that swept across the island
causing heavy damage.

Clothes "Made in Cuba"

The island has few clothing options. One can buy expensive clothes in
state-run stores or buy Chinese clothes that are a little cheaper and
are sold in the doorways of private homes. In these stoops, tens of
thousands of "timbiriches" (vending stands) have flourished since
private work was authorized.

Since self-employment was authorized in Cuba, tens of thousands of
porches and porticos have been converted into stands for selling
clothing that comes mainly from Ecuador. Photo: Raquel Perez

The license is actually for selling clothing made by the vendor
themself, but most of the clothes and shoes that are offered in the
streets come in bags or bales from Ecuador and Cancun. These are brought
into the country by "mules" who are very well "connected" with the
customs office at the airport.

Clothing and better quality electronic equipment arrive in the suitcases
of Cuban pilots and flight attendants. In this way they get bonuses,
which is much more necessary now that the fight against corruption has
derailed the major illicit businesses that operated in that industry.

"Abel" is an engineer who lives in Miami and travels twice a month to
spend his weekends in Cuba. He is a "mule" whose ticket is bought for
him in exchange for him bringing in 90 kg of goods. "I don't make a
penny, but I can travel for free whenever I want," he said.

Online sales

Despite the disappearance of the underwater cable and other limitations,
internet sales in Cuba are growing. The website "Revolico" offers Cubans
appliances, homes, cars, furniture, computers, animals, jewelry and much

The site has the ability to sell what many want to buy, even deodorant.
"Luis," for example, acquired his espresso machine through that site. He
selected it from the online catalog of a shop in Miami, and a month
later it showed up at his door.

In the meantime, products in government-owned stores go old for a lack
of buyers. The main reason is that their prices are inflated by a 240
percent sales tax, to which some managers will add a "commission" that
goes straight into their pockets.

It's logical for the government to want to protect domestic trade, but
the truth is that their stores typically lack products, and when they do
have these their prices are completely out of whack with people's wages.
But what's most serious is that this end of the importing of contraband
will leave tens of thousands of families without incomes.

(*) An authorized translation by Havana Times (from the Spanish
original) published by Cartas Desde Cuba.

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