THE CUBAN FISCAL SYSTEM,

1939,l by Roswell Magill '16 and Carl Shoup, pp.127.

This appraisal of the Cuban fiscal system is the result of an invitation extended in December, 1938, to Professors Magill and Shoup by the Cuban government. Their task was to recommend such changes in the tax laws and administrative procedure as would secure 5 to 10 million pesos of additional revenue, and, at the same time, bring the tax system of that country into harmony with accepted fiscal standards of equity and economy. A postcript to the invitation forbidding the extention of the inquiry into the field of Cuban government expenditures did not contribute to an easy solution of the problem.

The study exhibits that skilled craftsmanship that one comes to expect of investigators possessing backgrounds as rich in scholarly attainment and practical experience as do Professors Magill and Shoup. Professor Magill, a tax authority of international repute, the author of "Taxable Income," the definitive work in its field, and a former Under-Secretary of the Treasury, happily combines the requisites necessary to carry a project of this kind to a successful conclusion. Professor Shoup is known to all students of taxation, especially for the excellent study "Facing the Tax Problem," which he directed for the Twentieth Century Fund.

Statistical data, the very bread and meat upon which such an investigation lives and grows, frequently were unobtainable. Complete and trustworthy figures of total wealth, distribution of incomes, and the volume of business could not be had, and for the best of all reasons—they were nonexistent in Cuba. Ofttimes, in spite of the willingness of the Cuban officials to cooperate, budgetary figures were not available for months after the close of the fiscal year. And, too, official records when available did not include those taxes paid into the so-called "special funds," funds that are privately controlled and used for purposes which at best are obscure.

There is laid bare a tax system so constructed that major reliance is placed upon customs duties and sales taxes. Although an exhaustive list of commodities is covered, the burden of taxation falls with undue severity on those commodities, such as rice, salt and edible oils, which occupy a position of prime importance in the budgets of low-income receivers. As though the regressivity of the system were not a sufficient evil in itself, the situation is made more difficult by the unnecessary complexity of the tax structure. The multiplicity of taxes in vogue makes one suspect that the ruling principle guiding fiscal procedure in Cuba is, "never use a single tax when ten will do."

The authors make the following recommendations: first, budgetary procedures must be improved in order that records can be kept up to date and some degree of control can be maintained over expenditures; second, tax administration must be improved so that evasion can be minimized; third, an income tax should be introduced into the system to offset its present regressivity; fourth, the number of taxes in use should be reduced in order to simplify the system; fifth, taxes for the benefit of private organizations should be eliminated.