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FBIS-LAT-95-250 Daily Report 27 Dec 1995 CARIBBEAN Cuba

Further Reportage on National Assembly Meeting

Castro Addresses Session

PA2912021695 Havana Radio Havana Cuba in Spanish, 0205 GMT 27 Dec 95 PA2912021695 Havana Radio Havana Cuba Spanish BFN [Speech by President Fidel Castro at the first meeting of the sixth regular session of the National Assembly of the People's Government, ANPP, at the Conventions Palace in Havana on 26 December -- recorded]

[FBIS Translated Text] Listen, I believe it is a bit late already so I am forced to be brief regarding some issues. First, I want to congratulate the companeros who spoke here and presented their reports: Jose Luis, Millares, Osvaldo. They presented brief, concise, and clear reports that can be published as they are, although they may contain some confusing details, to help the population understand things.

I also want to congratulate Alarcon for his brilliant words. Having said this, when I heard the first two companeros who spoke -- you must know who were the first two persons who spoke when the debate began -- aside from the one who explained...

[Unidentified official, interrupting] Jose Luis Toledo and Leonel.

[Castro] Who was the first to speak?

[Unidentified official] Jose Luis Toledo.

[Castro] And who was the other?

[Unidentified official] Leonel.

[Castro] I believe the other is a student, an economist or something like that.

[Unidentified official] [words indistinct].

[Castro] Yes, he was the second.

[Unidentified official] The first one is also an economist.

[Castro] Well, when they spoke -- they later called one of these companeros Leonel -- I believe they were hearing me. They referred to something that is extremely important. I would leave this building concerned if I left with the idea that this issue of taxes is not sufficiently clear, because it would be a tragedy for the country and it would be practically rejecting the idea that we want to preserve the accomplishments of socialism, that we want to preserve socialism. Capitalism doesn't need to be created, it creates itself. Everyone exerts pressure from all directions so that we give opportunities to capitalism, as if it needed them.

And we must take into consideration what the second companero said concerning the fact that a sector will become immensely rich and that we could resolve problems now by resolving certain difficulties, which may become later a serious problem for the country. We must take this into consideration because this is the origin of a new social class. The more powerful it is, the more influence it will have over society and the more it will challenge socialism. I think this is a question of political strategy that we must take into consideration.

The other companero said that the he thought taxes were insufficient. And it is the truth. We have heard the explanation by Millares on what tactics are being pursued regarding taxes. I have insisted -- yesterday I told them this with energy -- that we must grab the bull by the horns and face this problem of taxes the way it must be confronted.

There are people in these businesses, not only those that have been authorized, but also those that have emerged around them or are linked to them. There was talk about the home restaurants, and later, there was talk about those people who sold things here and there. These people earn more in one day than what a high school or a grade school teacher earns in one month, more than these teachers who go to school every day to educate the children. The same applies to doctors; these people earn in one day the income a family doctor earns in one month. Some of them earn much more than what I earn in one month, and the fact is, they earn it in less than a day.

I talked about yesterday because it was yesterday when I held a meeting with the presidents of the commission to discuss the issue dealing with self-employed workers. There were 13,000 hired drivers registered on the list that had no license, and their average daily income amounted to 500 [pesos]. Many workers do not even earn 200 pesos in two days. In one day, these drivers earn what a factory worker earns in 15 days. There were 13,000 of them registered. I wonder where they got so many old cars.

There was a time, and I take the blame for it because I did not offer much resistance to the peculiar idea of giving cars to the administrative officials, since we thought it would save gasoline. I believe I opposed this idea for years, but it was finally approved. These drivers are now competing with tourism cabs and everyone else. They go inside the hotels and other places. However, they charge 100 pesos for their services.

One day, there was this guy who had purchased a retail business. He said he was a member of the retail trade association, didn't he? He had sold 90,000 pesos worth of wine, that is, 10,000 bottles of wine. I do not even recall the name of the wine, which was not made of grapes or anything similar. He sold 10,000 bottles of wine at 9 pesos per bottle, and made 90,000 pesos from one single sale. We later learned that he had sold this wine in every province. [Words indistinct] the miracle of the wine brought to life, the one referred to in the Bible. No one else knows how this wine [word indistinct]. This wine was not made of grapes, of course. This entire business went on with prior authorization. The Administrative Council of Retail Businesses of Santa Clara Province paid the wine maker in Havana Province -- as the man was from Havana --90,000 pesos to purchase 10,000 bottles of wine. The man earns one million pesos a year by selling each bottle of wine at 9 pesos. [Words indistinct]. However, the Food Industry Ministry is running around trying to find some bottles to bottle the vinegar people need for their everyday use.

The same applies to beer, fruit compote, and rum. There are many products that cannot be produced due to a lack of containers. It is as simple as that. In the past, we had to factories, one of them was large, to produce containers; one in Las Tunas and another here in Havana. We would like to at least put them to work through a joint association.

In Regla they sold 10,000 brooms to someone, I do not know to whom. We heard about things that are sold there such as shoes made with well-tanned and prepared leather. Some wondered from where the lumber for some beautiful pieces of living room furniture came. No one knew where the timber came from and in what forest the trees were felled.

All of these developments associated with situations of this sort should not discourage us. These are irregularities, but the wine man virtually became a national hero and the media even reported on him. This man almost became the savior of the fatherland -- a wine producer.

The country, in its effort to open up, is now also accepting foreign currency. In the past, the entire production of all factories belonged to the country regardless of whether there was were more or less efficiency involved. Now we must not forget that when we talk about exporting certain amounts of a product, half is ours and the other half belongs to our partner. One part involves salaries [words indistinct] everything is no longer ours. In the past, everything that was produced was ours as well as everything that was exported and everything that came in. And now we must share with our partner, and if we are successful -- and we need to be successful to develop the country -- we can no longer check only the accounts of our revenues. The tax must be there. What if we did not charge a tax? We discussed this within the law, and we thoroughly discussed whether it should be 30, 35, 40, or 25 [percent]. In the face of reality, we established a reasonable tax on profits.

As I said previously, we try to preserve everything we can for the state. And I am speaking the truth when I say that most of what has been done in the tourism arena involves national investments, resources of the country. Today, it has become the number one hope for the generation of foreign currency. This was not realized in the past. The previous mentality, which was adapted to past realities, disappeared. It was difficult to make the citizens understand the need for tourism and foreigners. We had a hard time with this ourselves, because we knew that this would be accompanied by other things. This hurt us, it hurt us very much, but we had to resign ourselves to it because there were things that hurt us even more. We hurt for the country, the revolution, and all of its works that we had to save, thus, we had to challenge one of the inconveniences.

We have to dedicate hotels to tourism. We have remitted revenues from hotel services. We have no alternative. We have done almost everything with our own resources, though. If a hotel is ours, it is ours. We share hotel property when we have no resources, or capital, or means to build it any other way. This is a complex matter. Regarding tourism, we had to educate everyone. All of the people are angry at constructors who have let down the revolution, at the sugarcane people who have let down the revolution.

At a recent meeting with some companeros I used stronger words to say that those people have let down the revolution. If there is one sector that has been able to count on resources, including foreign exchange, to perform well, that sector is construction. Not only construction workers failed, the designers, the administrators, and leaders of the construction sector, also failed.

This is true also for the sugarcane workers. The country has failed to receive more than $2 billion in the past three years because the sugar production level dropped to its present level. Production was going to drop anyhow, but it dropped more than was needed. There was abandonment, little care for seeds, many things.

This happened to important sources of income.

There is tourism now. It has brought much income, so much that nowadays tourism brings in more gross income than sugar. Already! In 1995! You can see this is a promising situation in a country enduring circumstances Alarcon has described as an economic war. I just found out what he read, because he started speaking so early.

I know that after the Agrarian Reform they started a war, that of Giron, which was not economic but military. I did not know they had declared an economic war since such an early date, weeks after the passing of the Agrarian Reform Law.

This is why I have said that whatever can be ours we own. If a hotel can be ours, wonderful; if this cannot be, well, then we will share it. But we continue believing in the huge benefits that can be derived from socialism. National interests, which are the interests of the people, are above everything else, as we see it.

Under capitalism, the interests of the people and the interests of the nation do not coincide. It is only under socialism that the nation's interests and those of the people coincide. Whatever we do is to benefit the people, not a particular social class, the rich, or the exploiters.

We have to charge taxes. In referring to comments I have made, Millares told me that we are demanding that they -- the economy, the Finance Ministry, and the bank -- make sure taxes are paid, that the necessary mechanisms be implemented. He is right. We could not have a perfect tax system for self--employed workers. This would have put many workers out of a job. The idea is to resolve social problems and material needs.

This is why we established a fixed tax amount. This tariff is backed by a good idea: Local people's government could increase the taxes.

This had to be done. It is always easier to give than to take. The best tactic is to take first and to give later because if you give something first and then you try to take something later you will have a big headache.

This is what happened with the coachmen -- something no one was able to foresee! In Las Tunas some coachmen were making up to 3,000 pesos, 4,000 pesos -- I don't know how much -- a huge amount, and they were paying the minimum tax. This quota has been increased but the authorities had to argue a lot with the coachmen because they almost went on strike, the Las Tunas coachmen! This would have been the first strike by coachmen in history! [Words indistinct] and they transported us, in a situation where there were no buses or anything, and they could charge whatever fare they wanted. With what they earned before they had several employees. One took care of the horse, another employee took care of one carriage, while another one cared for another carriage. The municipalities countered by raising the quotas.

But we have been defending, myself in particular, the idea of the gradual tax from the start. It is the one we have in mind because the income gaps are just huge. The person who earns, what can I say, a huge amount such as 1000 or thousands of pesos, is not the same as the one who earns 200 pesos. A gradual tax is much fairer and we want to reach that point, in a country that has forgotten everything about paying taxes. Yes, I remember when we debated the taxation of peasants many years ago. They ended up not paying, because they had no idea what taxes meant or any desire to pay taxes. I would add that they had no sympathy for taxes.

Now, people are confused about taxes. This assembly cannot conclude unless it is very clear on the matter. And we have to discard the notion that taxes make things more expensive. There are taxes that do make things more expensive, of course. If they charge you for a document, it is something you have to pay for. If they stamp a government seal as a customs tax, the tax makes the imported product more expensive in any country, right? It is different here. The state frequently pays the tax, that is, it buys expensive and sells cheap. It pays the tax in reverse.

But we are considering an income tax for self-employed persons, especially those with high incomes. It is a tax on profits and not on losses. Now, if they sell the pound of rice at 10 pesos, it has nothing to do with the tax but with the supply and demand of rice. In addition, due to the law on profiteering, you can always charge more because you know that for a television set to be repaired, and it was discussed during the forum, a person can charge up to 700 pesos a day. It was mentioned while we were talking about repairing motors, compressors, [word indistinct]. A desperate family with some resources is charged 700 pesos a day. It is an amazing income and it has nothing to do with the tax. What is more, you remove the tax and he charges more. If the money and demand exist, they will sell at higher prices even if all taxes are eliminated.

Ladies and gentlemen: This is the tax that must be collected, the tax on profiteering. Does somebody care to complain? Because they are profiteering on some of these prices, truly profiteering in a legal sense because we have legalized it. We have legalized profiteering, another distinct type of profiteering that was done with black bags here and there, one way or the other. But we must face reality.

The people should learn the meaning of state and socialism. Many are learning it. The state generously sells rice at 25 and beans at 30. I think these are the prices, more or less. Another person sells the rice at 10, and still another at 15 and beans at 20. Their prices are 30 or 40 times higher. [as heard]

Additionally, this tax on progressive profits of the self-employed will not cause higher or lower prices. The tax, in all justice, will simply collect part of the money that these vendors are taking from the people. The people are not harmed at all. But it seems the people have a great confusion as to the meaning of taxes. The circulation tax does cause a price raise on beer and other products because it is a tax on products, not on the vendor. If the product's price is raised by five pesos, that is it. As for the person who sells his car, he will find no takers and, consequently, will not be able to sell it. Why have the prices of products come down? Not so much because of increased production... [pauses] Every time I see Longo I ask him: Longo, how are the peasants? How much are they producing?

The price reduction has been brought about because 3 billion pesos, 25 percent of liquidity, have been collected from the people. We have collected one fourth. They have no more money as in the early days. So the amount of circulating currency has dropped. Higher prices would prevent sales because free market, supply and demand, is in operation. If they no longer have this amount of money, they cannot buy rice at 10, but at 8, 7 [words indistinct]. Yet they collect less money because they sell less cigars and less rum. They do not have money to buy [words indistinct], although the income was very high. A time will come when a balance will nearly be attained. This is to say, a time will come when it will be increasingly difficult to collect circulating money. In addition, they do not intend to collect all of it. Yet the collections from these products are reduced as the result of the measures taken at the National Assembly, where they were discussed at length, as it is said here. I think we have plenty of reasons to feel satisfied over all of the measures taken in all fields, economic, political, and administrative, as well as controls and demands with which we must keep on struggling. All of these measures have yielded results. Stability in the country. I still remember the events halfway through last year, when it was impossible to travel to Regla.

We have attained peace, order, and stability in the country. All of these factors have contributed to increase confidence in the revolution. Apart from the economic results and as a consequence of a policy of opening and some good associations we have struck, we have improved the production of nickel and cement, which are part of a policy of opening to foreign investment. We have been able to open manufacturing plants and seek markets we did not have. Now we feel more confident.

We must be 100 percent honest. We are talking of things we expect for the next year. We expect a sugar crop of 4.5 million tons. I can tell you this does not make us happy. This figure represents an increase of approximately 30 percent. But approximately 300 million [currency not specified] have been required to buy fertilizer that the sugarcane did not have: Raw materials, to manufacture or buy tires, spare parts, motors, metal for repairing sugar mills. All this required a 300 million loan and a very expensive loan at that. We do not enjoy the credit status of other countries because we are blockaded. Such loans are extremely costly for us. For those 300 million we will have to pay more than 50 million in interest. In other words, we are already spending resources we have obtained with our struggle, resistance, and greater efficiency.

Many people look upon Cuba with satisfaction because they see the order, the common sense with which things are being done, without the hurry and foolishness that have devastated other countries. Such things are not published here. But I see some things happening in some countries that used to be our friends, which we still regard with consideration. Terrible things are happening in some countries. We checked our fall in 1994 and this year we started to lift ourselves up despite a double blockade and the threat of all those laws that have a negative influence on us. The people are influenced by such laws as soon as they are announced. Such laws act as a deterrent against business and possibilities and create problems of all kinds. Loans are negotiated with this or that bank. What comes in this way, goes out that way. And I think what goes out that way is more than what comes in.

The people see we have done things in an orderly manner. People abroad also see that we have solved very difficult problems and that we have done it by ourselves. The people see the honesty of those who must make the most important decisions in all of this. They see that here there is no commission that is worth anything, and when worth anything it is only at a basic level [Ven que aqui no hay una comision que valga y cuando vale es a nivel basico]. No buyer allows himself to be bribed by a company selling something, and no minister or party leader making fundamental decisions has ever been dismissed. All of this is appreciated. And we have access to more loans. We are borrowing. We borrowed approximately 300 million for the sugarcane. And we had already borrowed for tobacco. By the way, this loan coincided with the rainy season in January last year in Pinar del Rio. The place was under water. And this happened the day the visitors from the enterprise that lent us the funds arrived in the country. And the first thing these people saw were the scenes on television. We said to them: The country will respond to that. Be still. No one knew what could be saved.

Well, there was a marked improvement in the coffee crop this year. Unfortunately, the same improvement was not present in twisted tobacco. This is not just a matter of quantity but of quality. And a cigar of these is sold for a good price. We receive at least 60 million. It is true, as someone said, that our products have all the market we wish for them. There was no large increase. We were forced to sell at lower prices. We amortized our loans, but we have had to sell our raw materials. Of course, it is important to amortize our loans because, for instance, this year we will have loans available for tobacco once again. What we have to do now is simply to produce high quality tobacco for twisting all the tobacco we can sell.

Now we need to ensure we make a quality product. We have this sugarcane harvest ahead of us. Everything we have talked about here can collapse if this harvest fails. This harvest has caused many meetings, as provincial, party, and government leaders know very well. Every detail was analyzed such as the daily rainfall, whether a part broke, if the [word indistinct] plan has been fulfilled or not. Even I acquired the right to the title of prophet, because every month I said what was going to happen. It was clear; the year's behavior could be seen.

Measures were improvised; the fertilizer purchased was not enough for the (?cold) sugarcane, we sought resources to fertilize the caballeria and the (?cold). We said, if we are going to have less, hopefully the yield will be better. All sorts of measures were taken and we took all the risks.

These 300 million have to be repaid, plus interest. Now we start with the rice in much the same way. We do not have money to purchase herbicides, pesticides, or fertilizer for rice. We are even making an effort to go back to engineering work and convert all available rice fields, in a minimum of time and with greater rational and economical methods. Yesterday's price for rice was $360 a ton, nearly twice what it was some time back.

These are possibilities, but we need to fulfill our obligations. That is why companero Jose Luis said that there was some uncertainty. It is good that we know there is uncertainty and that we must struggle with realities. We need to be more aware of this. That is why the companero also said that this harvest must be followed closely, mill by mill, wagon by wagon, truck by truck, cart by cart, and man by man.

In fact, because the weather is acting strange, we are advancing the date from what was supposedly the ideal schedule, and moving ahead a couple of days. But I know of one mill that has advanced the date 10 days. That was the Cielo Redondo mill. In those 10 days there was 150 mm of rain. The extra 10 days it had gained were lost.

We are advancing the schedule because it is better to risk losing some sugarcane than to find ourselves harvesting in May. It would really be a pity to waste all that effort. We need to struggle against rain and make people aware. We cannot halt a harvest because of a drizzle. We can't just say the harvest was stopped by rain, or that there's just a green mark, there has been little rain. We have to guarantee this harvest and this is serious.

Regarding the fundamental problems and the topic of taxes: Some of the goals are high the way it stands and the way they were proposed. That tourism's net profits increase by 50 percent is a goal that needs to be fought for, but is nevertheless a high goal and a final one. The goals are high but the decision has been made to fulfill them.

There is the price matter. We have been thinking about the price uncertainty matter, worse yet, about the painful imports price situation. Fuel prices will go up. Somebody mentioned 87 million [not further specified] more [words indistinct] in fuel.

Food prices are going up tremendously, but this is a problem of another nature, as I explained the other day. This is a worldwide problem. We are going to put together some information to send it to the cadres, to everybody, so that they know about this situation, which forces us to make a bigger food-production effort.

The price of wheat is very high. Rice? If you want to buy rice, you will not be able to find it. The prices of all grains have gone up tremendously. So we are going to enter 1996 with higher fuel prices, much higher food prices, and somewhat lower sugar prices, since sugar has not suffered a production drop, sugar production has increased.

These are uncertainty factors, as Jose Luis would say, and we must be aware of this. We are entitled to feel very satisfied with our achievements, which are a source of amazement. There is the fact that the value of the peso has gained in value five or six times. But I also have to think about taxes. I am thinking about the bottle-man. In the past he needed 120 pesos to get a dollar. Now he only needs 25 pesos.

Teachers will not benefit much from this. This is clear. As a rule they did not have 120 pesos. Now the dollar can be gotten a bit easier. Maybe the teacher has 25 pesos to buy something someday. We are revalorizing our currency. Who is going to benefit from this? Not the new rich. This has to benefit the people.

The rich will benefit a lot anyhow. They are still going to be rich. Progressive taxes can go as high as 50 percent and he who earns 300,000 pesos will still have 150,000 pesos.

All of us have worked hard for this revolution we are trying to save now. None of us imagined having to work for a bourgeoisie. Throughout the revolution we have tried to help the workers. I have mentioned that we have never sold an automobile, or a motorcycle, to private citizens. They were sold, yes, but as rewards, to sugar mill workers, especially in the countryside. Thousands of motorcycles were sold this way. Some have been repurchased recently by people who have some money, despite the fact that there is a compromise that prohibits this and offenders can lose their right to the motorcycle, to the automobile, to the house, if they have a house. We have such cases. The revolution gave houses, beautiful apartments. Remember the apartments we delivered in the Sports Zone. Some people have moved in with their neighbors and have rented their apartment for 600 or 700 pesos.

What do some people want? That we do not charge a penny in taxes? They have to pay. We are not working for those people. We are not working for the rich. This never crossed our mind.

Do we have to tolerate the presence of rich people? Fine! But I have said that they do not have everything in their hands. The revolution has not sold houses to anybody. It delivered them. It delivered apartments to people paying them a laughable sum: 10 percent of their salaries. How many billion pesos has the revolution delivered in the form of residences? Alarcon could have mentioned this also when he spoke of the ideas of the rich landowners.

Listen to this: Money did not determine who could buy a television set. Remember that there have been profiteers for quite some time, and people with a lot of money. However, television sets went to the workers until the time came when there were so many sets available that they were sold freely.

Washing machines, which were distributed by the women, refrigerators, and many other articles were distributed not with basis on money. We always helped the workers.

Now we cannot operate that way. We have to function differently. Today we have the rich, and not only those who get rich honestly, if such thing is possible and, in looking to determine where raw material comes from, we were to find nothing wrong.

There are those who get rich honestly and there will always be such people. If the convertible peso someday becomes the equivalent of the other peso we will not have two currencies anymore. How long will it be before that happens? I wonder if it would be desirable to have that happen.

We have to keep the people from being confused. It is bad to have the people bewildered. It is necessary that the people help, that they cooperate, that they provide information on who is acting wrongly. There are those who rent things. If renting is authorized, then it is an authorized activity, but let the landlord register and pay his dues.

Taxes are necessary for the struggle against crime, against illegal residents. The City of Havana is receiving the punishment it deserves. This goes for the people of Havana and many people from the eastern provinces who were brought here by the people of Havana. They have the afflictions they deserve: Water supplies and other supplies are not sufficient.

I have heard of a Havana municipality that has 30,000 illegal residents. I cannot believe this, and I will not believe it until I verify it myself, and it is not one of the largest municipalities! How could 30,000 people live as illegal residents in a municipality if they were not getting the support -- a room, a corner -- to stay there?

This is another battle the country has to wage, the battle against illegal residents. The promotion of this situation shows lack of concern.

The people must be convinced that illegal residents weigh down on them and directly affect them negatively. Each illegal resident represents one more person using transportation services, demanding housing, using water and other supplies. The people must use their logic and realize that opening their doors wide open to illegal residents is egotistic, mistaken, and antisocial.

Likewise we must keep people from mistakenly confusing circulation taxes with successively increased taxes. We are not so concerned with taxes from a worker's salary. We are concerned with receiving tax payment from those who earn in one day 10 times or 30 times as much as what a worker earns.

This should concern us all. The media, which can help us, and that so much has helped us in so many things, could now help us make the people understand this problem instead of turning the wine-producer into a hero. Enough is that we have to digest some television advertisement. We have to accept them, but none of us like it. Drink this, buy that, eat this, wear these clothes. All this is crazy and we have had to accept it. How many things we have had to accept!

But don't turn the wine man into a hero, for example. From what I have heard of him in recent days he could be turned into a saint. Who knows! This has to be verified. That man is going to save the country.

This was a source of concern for me, Alarcon. I think you were going to close the event and some of these things were going to remain vague, and this is the Assembly that is everywhere and that has to participate in this battle. [applause]