Domingo, 20 de Enero de 2019
Última actualización: 00:12 CET

A new fiscal policy threatens to further stifle Cuba's agricultural production

Cuban field workers. (TOMAS MUNITA / LATAM)

As of this year Cuban farmers will be subject to new tax terms, now paying personal income tax, along with most of the country’s self-employed workers.

"In the first 90 days of each year they must file the Sworn Statement of their income from the previous year with the National Tax Administration Office (ONAT). For farmers, it will enter into force in 2019. In accordance with their taxable base, they will be charged on their income, on a progressive scale, from 5 to 50%,” announced an ONAT official in Mayari, Holguin, who preferred to remain anonymous.

"We still do not have the official form that will specify the incomes for each progressive percentage, but we know that it will range up to 50%, for those who earn the most. All farmers must file the Sworn Statement, which will also increase our work. In recent days there have been training seminars, for both us and for the productive forms of agriculture. It is something new that is generating many questions and fears," he said.

"Until last year, farmers enjoyed tax exemptions, as an incentive for production," said the economist of a municipal cooperative who had already participated in a training session.

"They did not have to file the sworn statement, nor was their personal income taxed; only their gross income, regularly levied on the self-employed, on a monthly basis, regularly taxed at 10%, but with a 50% reduction; that is, 5%," explained the employee.

"In addition, farmers have their gross sales taxed at 2% for the sociocultural account, and another 1 or 2% for the payment of bureaucratic procedures at cooperatives, with which they must be associated, in addition to the 1% municipal development tax. But all this will be included as an advance, except the 2% sociocultural tax," he concluded.

The new tax on net personal income, although it accounts for payments made, has not been well received by the most successful farmers, who will be the most affected. The Government has made it clear, on repeated occasions, that it does not intend to permit the accumulation of wealth.

There are rumors of usufructuaries, who, fearful of the new tax, are handing over their land and engaging in other activities less taxing than agriculture. Many entrepreneurial farmers are also said to be refraining from joining any large tobacco or livestock production plans.

"If they levy that tax, this year they got me, but the next one I won't plant any tobacco, but something else. I'm not going to work for the State. Let them sow it. Tobacco is very risky and requires many investments. If one year you fail, you lose everything, and nobody cares, but then there’s a good year, and you make up for it. But if they slap you with those taxes, the business is only the State's. It doesn't work for us," said Arturo Pupo, the top producer of export tobacco in the east of the country, at the Desembarco del Granma meeting, where the new fiscal policy was announced.

"It may be true, what they say, that all over the whole world high taxes are paid, and in some countries even more than here, but we don't see how they are spending the money they take from us," said another farmer coming out of the meeting.

"The streets are full of potholes, the hospitals are disgusting, there are no buses for transportation, only carriages, and everything is a disaster. So, the money that one earns, with so much sacrifice, and risk, if he hand it over, he loses it. This country will never improve. You have to improve yourself. If you don't, you're screwed," he added.

The economic plans of Raúl Castro, included in the Guidelines of the Economic and Social Policy of the Communist Party, called for a great boost to the agricultural sector and self-sufficiency in basic foods, eliminating imports and increasing exports. But, after more than two decades, the results have come up short.

Now the new fiscal policy being implemented under the government of Miguel Díaz-Canel may have a negative impact, exacerbating the stagnation of the country's agricultural production.