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article imageCuban car prices skyrocket under new law

By Lizz Riggs     Jan 9, 2014 in World
While Cubans are finally able to purchase cars without government permission for the first time since 1959, prices on new and used vehicles are creating the ultimate sticker shock.
For the first time since the 1959 revolution when Cuba converted to communism, Cubans have the right to buy new and used vehicles from the state without government permission.
While this initially made many Cuban's ecstatic to head to the dealership, the mark-ups that are coming along with new and used cars are making them take a step back.
Reuters is reporting that price markups of 400 percent on new vehicles in the country.
"I earn 600 Cuban pesos per month (approximately $30). That means in my whole life I can't buy one of these. I am going to die before I can buy a new car," Cuban citizen Roberto Gonzales told Reuters.
"With these prices ... those who will be able to buy are the privileged, or the bandits," Alfredo Boue, a 25-year-old cook, told Fox News. "I think the bandits are not the ones (stealing) in the streets, but the people who set these prices."
"These prices will clearly be outside the purchasing capability of the vast majority of Cubans, even with the support from relatives abroad. In essence, they represent a luxury tax imposed by the government on the nouveau riches of Cuba," said John Kirk, one of Canada's leading academic experts on Latin America.
The new law eliminates the need for drivers to wait for an authorization permit from the government, but the government still has the monopoly on importing automobiles directly into Cuba.
Changes to the system two years ago allowed newer models to be sold to people once they received approval from the government. These new regulations rid the approval process, in part of Cuba's president, Raul Castro's effort to increase citizen's freedom.
Just because the nation is opening up its automotive market doesn't mean they are making it affordable for all citizens. Newer vehicle models can attach up to a 100-per cent tax, meant to fund Cuba's public transport system, according to the Communist Party's newspaper, Granma.
Bert Hoffmann, a Cuba expert at the German Institute of Global and Area Studies in Hamburg, Germany, told Autonews, "The state monopoly on retail remains sacred, and this means high prices. If cars are for private use, these high prices function as an understandable 'luxury tax.' But as cars and vans are widely used for business purposes, these high costs also are a strong brake on more dynamic development."
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