Cuba unveils new economic freedoms for businesses*
Associated Press in Havana
Cuba has made official the grand economic changes it announced last month, publishing nearly 100 pages of rules and regulations for small businesses in the government gazette.
The move means eagerly anticipated licences for the self-employed should be around the corner, and by yesterday lines of potential entrepreneurs had already formed at government offices around the capital.
Cuba announced on 13 September that it would lay off half a million workers and push many of them into the private sector.
It later detailed 178 private jobs that will be allowable, the most significant economic changes on the island since the early 1990s. But the rules did not become law until they were published yesterday.
They allow Cubans over the age of 17 to start their own business, so long as they are permanent residents. Citizens can also apply for licences for more than one business. They will even be allowed to sell their services to the state, though there will be strict transparency rules to try to stave off corruption.
The law also establishes up to six months of sick leave and a year of maternity leave so that self-employed workers do not have to pay tax while they are not earning.
“I hope this licence will bring me a better future,” said Lazaro Ramos, who was waiting outside a government office in Havana’s 10 de Octubre neighbourhood.
Ramos, 34, said he was unemployed but was hoping to get permission to make pinatas for children’s parties. “The economy is not good. But with this, I will be able to make ends meet.”
Officials took down personal information and told applicants to come back in a couple of weeks. It was not clear how long it would take to process the licences.
The rules detail four kinds of taxes for the private sector: a sliding personal income tax, a sales tax, a public service tax and a payroll tax. It also establishes minimum monthly fees for different kinds of businesses, as well as deductions Cubans can take to reduce their tax burden.
Some of the tax rules were detailed in the Communist party newspaper, Granma, last week, but the report lacked crucial details. The lengthy rules laid out in the government gazette clear up most of the uncertainty.
The law establishes 178 private activities for which licences can be granted – everything from restaurateur to taxi driver. The majority of those businesses will be eligible for a simplified tax system that establishes a monthly quota regardless of revenue.
The Cuban economy is in the midst of a major restructuring under President Raul Castro. The half million workers will be laid off by March 2011, and the Cuban leader has warned that another 500,000 state jobs must be shed within the next five years. In total, that would be about 20% of the island’s labour force.
Castro has insisted the changes do not mean the end of Cuba’s socialist system. But he says the cash-strapped government can no longer afford to subsidise every aspect of Cuban life and has warned Cubans they will have to work hard to make their own way.
The government currently employs about 85% of the labour force.