THE CUBA REVIEW 



of leases, increased tenfold. It should be remembered, too, that taxes on transactions 

 of these classes in Cuba are not isolated or the only charges which the parties thereto 

 are called upon to bear. They must pay as well heavy fees to notaries whose services 

 cannot be dispensed with, and like heavy fees to the Registrars of Property. Even if 

 the proposed taxes were tjiemselves moderate, which they are not, they would become 

 burdensome when these other charges are taken into consideration. Referring again 

 to our example of the company organized with two million dollars paid in capital, 

 let us assume that this capital consists of cash or available funds with which the 

 company proposes to buy, and does buy, a sugar estate of like value. Under the 

 existing law, the taxes on the purchase would be twenty thousand dollars. Under the 

 proposed law it would be forty thousand dollars. In addition the company would 

 probably have to pay notarial and registration charges aggregating from two to three 

 thousand dollars. The same company, let us suppose, is obliged to acquire another 

 property of like value as a result of foreclosure proceedings. On that transaction it 

 would have to pay a tax of sixty thousand dollars. In other words, considering the 

 history of our company since organization and before beginning its operation, in order 

 to have secured a paid in capital of two million dollars, issue corresponding securities 

 and acquire corresponding properties, it will have had to pay total taxes and inevitable 

 fees totalling from seventy-five to one hundred thousand dollars; and this before it 

 has been able to make a single bag of sugar or a dollar's profit on operations. In 

 case it should desire to mortgage its properties, to the extent of one million five hundred 

 thousand dollars, for example, it will have to pay a further tax of seventy-five hundred 

 dollars. 



The present moment is characterized by operations actual or projected of an 

 unusual importance in the sugar industry. The next few months will undoubtedly 

 witness many reorganizations, transfers, mortgages, foreclosures, etc. These transactions 

 will not take place in a time of prosperity like that which occurred in 1919-1920, 

 but at a time when all enterprises ought to conserve to their utmost ability their 

 cash reserves. It is through these new enterprises, and through them alone, that the 

 sugar industry can be rehabilitated upon a sound and conservative basis. Instead of 

 encouraging and making easy the period of their birth and infancy, the new bill proposes 

 to place burdens and obstacles in their way; burdens and obstacles upon the acquisition 

 and most ordinary dealings in property which in the most economically advanced 

 countries of the world are either unjustifiable or unwise as forms of taxation, or, at 

 least, are necessarily limited to very low rates. 



A particularly objectionable feature of the proposed law is the heavy penalty 

 (for apparently it is a penalty) imposed upon the enforcement by mortgage creditors 

 of the remedies which the Law allows them, and which in a time such as this, are 

 their only means of collecting their just due. Even granted that it may be just to 

 impose a tax of two per cent, on the purchase of real estate, on what basis or on 

 what theory can be justified a tax of three per cent, upon the adjudication of such 

 property to a mortgage creditor, or upon his efforts to secure the sale of the prop>erty 

 to satisfy his claim? Can such a proposal be guided by any other motive than to 

 prevent and to block the enforcement of just remedies upon which ultimately rests a 

 large part of the banking structure in an agricultural community such as Cuba? The 

 easy enforcement of mortgages, with full protection to debtors through the phase of 

 judicial procedure, should be an objective recognized in all Cuban legislation. The 

 proposed law is a step backward in this matter, which we believe cannot be defended 

 upon any sound economic or legal principle, and which may seriously affect the existence 

 of future credits to Cuban enterprises. 



It is to be recommended, not in the interest of any particular case or of companies 

 which may be formed at any particular time, but rather in the interest of the whole 

 country which requires the attraction of new capital as rapidly as possible, that the 

 taxes upon the classes of transactions above enumerated should be left at the existing 

 rates: ^nd that the proposed increase should in every case be rejected. 



