For the first time in 50 years, citizens of communist Cuba can now own a new car legally again following President Raul Castro's series of free-market reforms designed to prevent the island from falling into economic ruin. The country has legalized the sale and purchase of automobiles for all Cuban citizens beginning this year as part of the communist-run island's attempt at ongoing economic transformation.
Prior to this newest legislation, Cuban auto sales had been limited to only those cars built before the 1959 revolution when Fidel Castro took power, and is the reason so many classic American cars from the 1950s are still found on the streets of Cuba today. Although, as one might imagine, cars from the 50’s are largely found in less-than great operating condition today. In fact, almost every car on the road in Cuba today is in disrepair as only a few select new Soviet Bloc autos entered the island over the last two decades. Because private car sales have been illegal without permission from the government since the early 1960s, it created a booming black market in used cars where buyers would pay cash for what amounted to handshake agreements, and the actual title never changed hands.
The new law will allow the sale of all makes and models, and it also allows the ownership of more than one car. Prospective buyers and sellers must both pay a 4 per cent tax, and the buyers must prove that the money used for the purchase was obtained legally. In the case of multiple vehicles, the sale and purchase tax rates will be raised accordingly. A new 40-page handbook accompanying the new law specifies that Cubans who leave the island permanently can now transfer ownership of a car they leave behind to a relative or sell it before they go. Prior to the new laws, the Cuban government would seize the automobiles of those who left the country.
While the new laws put a welcome and long overdue end to the Cuban restrictions on car sales, it is unknown how many will actually be able to take advantage of the changes because the Cuban economy remains so depressed and typical annual salaries aren’t nearly enough to finance a new vehicle. Buying used vehicles legally will now be complicated by the fact that so many cars are so far removed from their original title holders, that proving legal ownership could be a real nightmare once the new regulations take effect. Although a small number of successful Cuban business owners may be able to convert their profits into a new set of wheels under the new rules, it remains to be seen whether or not the proposed market reforms can rescue the island from slipping into further economic despair.
New.com