A prior post discussed Cuba’s new regulations for the self-employed sector (the private sector) of the economy. More details on these new regulations are provided by Nora Gámez Torres in the Miami Herald.[1]
She says that he new regulations limit a Cuban to owning only one private enterprise and impose higher taxes and more restrictions on many self-employment endeavors, including the arts. All of these measures are designed “to limit the accumulation of wealth by Cubans.”
As a result, a Cuban who runs a private restaurant (a paladar) will not be able to rent a room in his or her home. The Cuban Vice Minister for Labor and Social Security, Marta Elena Feitó Cabrera, explained that owning more than one business “is not the essence and the spirit of the TCP [self-employment], which consists of workers exercising their daily activities.”
The government also stated it would eliminate the tax exemption for businesses that have up to five employees and would instead impose a tax on a sliding scale that increases with each worker hired. It also ordered an increase in the required minimum monthly taxes of businesses in various categories. Economists, however, have warned that more taxes on hiring employees could dramatically hamper the development of the private sector at a critical moment.
To increase state controls, each authorized activity will be under the supervision of a state ministry, in addition to the municipal and provincial government entities, which can intervene to set prices. The level of control reaches such extremes that the Official Gazette published a table with classifications on the quality of public restrooms and the leasing rates that would have to be paid by “public bathroom attendants,” one of the authorized self-employment categories. Some public bathrooms are leased by the state to individuals who then are responsible for upkeep and make their money by charging users a fee.
The new regulations also could have a significant impact on the cultural sector with the Ministry of Culture empowered to increase control over artists and musicians and impose more censorship in the country.
For example, there now are fines and forfeitures, as well as the possible loss of the self-employment license, to those who hire musicians to perform concerts in private bars and clubs as well as in state-owned venues without the authorization of the Ministry of Culture or the state agencies that provide legal representation to artists and musicians. Many artists in urban genres such as reggaeton and hip-hop, who have been critical of the Cuban government, do not hold state permits to perform in public. However, many usually perform in private businesses or in other venues. Painters or artists who sell their works without state authorization also could be penalized.
Even books are the target of new censorship: private persons, businesses and state enterprises may not sell books that have “contents that are harmful to ethical and cultural values.”
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[1] Gámez, Cuba imposes more taxes and controls on private sector and increases censorship of the arts, Miami Herald (July 10, 2018).
Yet More Details on Cuban New Regulations for Private Business
For 13 permitted self-employment activities, the Cuban individual will have to submit a “sworn declaration of the origin of the source of financing and the investments made or to be executed” and, in certain cases, must also identify the “origin of the equipment and means”, as well as compliance with standards of hygiene, environment and fire protection, among others.
This is a requirement for the most lucrative businesses, including landlord of houses, rooms and spaces; building construction, repair and maintenance service; gastronomic service in cafes, restaurants, bars; and transport of cargo and passengers with automotive, rail and maritime means.
In addition, if the entrepreneur plans to hire workers, “it will be necessary to request it and submit the draft labor contract or equivalent document, where the clauses and agreed conditions are specified.”
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The government will demand to declare the origin of the funds for the most lucrative private businesses, Diario de Cuba (July 12, 2018),
http://www.diariodecuba.com/cuba/1531430201_40626.html