Although initially saying it was willing to hold off after secret business entrepreneurs warned the measure would push them to stop importing meat, powdered milk, and other essentials, the Cuban government now places price cap on some imported foods, which raises the public’s risk of hunger.
Starting soon, a new rule that was published in the Cuban Gazette on Monday prohibits the sale of chicken parts to consumers by private companies. A gram of chicken thighs may cost more than 900 rupees in a private business, and present retail costs on the island are over 700 peso.
The standard herald furthermore published new capped rates for powdered cheese, sausages, pasta, cooking oil and wash sold by private companies. Similar price caps on foods sold in state businesses were not imposed by the government.
Private business owners objected to the proposed crowns at a meeting with two federal officials in late June, claiming the government had used a “fictitious” money transfer rate for calculations and did not take into account the high taxes and fees that secret importers are required to pay.
The companies warned that the estimate would cause food shortages in the middle of the summer, when public unrest has previously risen as a result of heating and power outages, according to a secret recording from the conference obtained by the Miami Herald.
Cubans increasingly rely on foreign support and small private businesses to have because the government is essentially destitute and unable to obtain food worldwide and secret farmers have no incentive to make. In a nation where the average state wage is around$ 11 or 4, 000 Caribbean pesos per month, the value restrictions are still far above what the majority of Cubans can manage.
The companies, however, demanded the suspension of the 10 % income tax and claimed that their prices were driven by the high income they have to pay the authorities. The six products ‘ custom taxes have been suspended as part of the Monday rules, which the entrepreneurs have already stated at the meeting as being insufficient to lower the prices.
Use of the funds deposited in Caribbean bank accounts is restricted for small and medium private companies. Alternatively, they may purchase dollars in the informal industry to give local businesses in the country and have to pay additional fees to apply warehouses and port facilities. Those elements, added to the higher prices of food in the global market, result in high native charges, the businesses complained during the meeting.
The measure, which was supposed to kick in on July 1, was suspended amid meetings about” good rates” with the private sector, some local governments said at the moment. According to a state television report, one of the officers present at the June meet, Vice Minister of Finances and Charges Lourdes Rodrigues, noted the following day that the measure had been partially suspended in response to the need to continue speaking with the business entrepreneurs about their “realities” and prices.
What led to the government’s implementation of the capped prices is a mystery. Despite the numerous restrictions that it faces, Cuban authorities have recently indicated that they want to rein in an emerging private sector that is rapidly expanding.
The vice minister, Rodrguez, made it clear during the meeting in June that the high prices in private stores are a result of the high costs these companies pay to import food. But publicly, the government takes a different position, accusing private companies of price speculation and fueling skyrocketing inflation, even if most economists blame the latter on the government’s gigantic fiscal deficit and the country’s minimal production levels.
After Prime Minister Manuel Marrero laid out a vague plan to “organize the non-state sector of the economy” and “fight economic distortions” last December, the government has detained some private business owners on suspicion of tax evasion and has put in place travel restrictions for those who owe taxes.
The government released last week a new rule limiting the amount of money state companies can pay to private businesses after Marrero complained that state companies were “giving up” production capabilities to the private sector. Some of those contracts have enabled the government to use private importers to buy flour to make bread available to the general public.
But in recent meetings of the Council of Ministers and the Communist Party’s Politburo and Central Committee, Marrero and the country’s handpicked president, Miguel Diaz-Canel, have doubled down on talks about exercising more control, without providing a clear plan to get the economy back on track. They have insisted on the benefits of austerity measures and a centrally planned economy, the same policies that have led to the island’s economy’s current precarious state.
In the most recent Council of Ministers meeting, Marrero, a former military officer, described the island situation as a “war economy”
” This is when we need planning the most, and when we need to exert control the most”, he said.
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