New tax law takes effect in January 2013
By the staff of IPS Cuba
ipscuba@ipscuba.net
HAVANA – The new tax law, approved by the Cuban Parliament in late July, generated a debate between artists and activists about the meaning of taxes in the country, the regulations that will rule that system beginning in 2013, and the need to hold referenda before approving laws of that type.
“We need more information about the new [tax] law so we can compare and understand its implications,” a young woman worker told IPS, asking that she not be identified. “We who work are already contributing a lot. Besides, our wages are not enough to cover the basic necessities.”
After the announcement of the law’s approval, in blogs, websites and e-mail, diverse opinions circulated on the subject. The newspaper Granma, official organ of the Communist Party of Cuba, alluded in its Aug. 3 issue to the debate brewing among the nationals.
Activist Rogelio Díaz expressed in his blog Bubusopia his disagreement with the idea of extending taxes “to all Cuban citizens.” Díaz’s posting was motivated by the words of deputy Alexis Leyva at the July 23 session of the National Assembly (single-chamber Parliament), broadcast later on national TV.
“A fair tax law should collect taxes from 100 percent of the citizens who are working and economically active and even from those who don’t work but are a burden to the State because they receive all the benefits that the State produces,” said the artist (better known as Kcho) during an analysis of the tax bill, which will take effect next year.
A deputy since 2003, Kcho said this on behalf of the artists’ guild: “If we earn more, then we should pay more. Let’s make this sacrifice out of respect for the collective well-being. It is our duty and we should continue to work for nothing, volunteering for the people, without receiving any tax benefit for it, only the respect, the applause and the satisfaction of doing what’s right.”
Reacting to the words of Kcho, a native of the Isle of Youth, the second largest island in the Cuban archipelago, art curator Abelardo Mena sent an e-mail lamenting that the Cuban people “did not have an opportunity to know in advance the details of the tax law discussed in the Assembly.”
In addition, he recalled that “in the 1990s, when a tax culture and the collection of taxes on wages were first proposed, the topic was put to popular debate through the labor unions […] and was soundly rejected.” Mena mentioned the collection of a surcharge of at least 240 percent on the real price of the products sold at hard-currency stores. In his opinion, that already constituted a tax on the consumer.
“A tax law that presumes to be intelligent and intended to encourage the nation’s economic development cannot afford to charge 100 percent to all its citizens and businesses. That’s a political blunder and an example of social neoliberalism,” he said.
Another point of view
On Aug. 3, the newspaper Granma published an article titled “Against misinterpretations and the statements of Alexis Leyva (Kcho) at the Ninth Ordinary Session of the National Assembly of Popular Power on July 23, 2012,” that reproduced the statement read by the deputy.
The newspaper article, which bore no byline, said: “Since the tax system was reanimated in 1994, a great majority of writers, artists and intellectuals not only have met their fiscal obligations but also have done so in the knowledge that, by so doing, they were contributing to the budget of a State that has dignified the role and place of creators in the bosom of society.”
In response, Mendaro Gregory, Promoter of Oral Literature, sent out e-mails stating his personal opinion on aspects mentioned in the article.
About the writers and artists, he specified that they started paying taxes before 1994. “In practice, because of the wages we work for, we artists have NEVER stopped paying taxes, medical insurance and making an economic contribution to the development of social works,” Gregory wrote.
The new tax law establishes 19 taxes (including Customs duties), three contributions (among them the Territorial Contribution for Local Development) and three assessments. Generally speaking, the law adds seven new taxes to the previous law, approved on Aug. 4, 1994.
Some aspects of the new law surfaced in the local media. It will be applied gradually and the taxes on personal income and housing will not be applied until the conditions are right. No taxes will be imposed on remittances of family aid received from abroad in 2012.
