Tuesday, October 26, 2010

Cubans queue for business permits

Cubans queue for business permits
Last Modified: 26 Oct 2010 07:20 GMT

Cubans have begun queuing outside government offices across the capital,
Havana, to register their own businesses as the country made official a
sweeping economic overhaul announced last month.

Cuba unveiled new rules for broader self-employment in the government
Gazette on Monday, a month after announcing new guidelines for free
enterprise activities in 178 fields.

The government said last month that it planned to expand its private
sector in an effort to help preserve socialism, but the rules did not
become law until they were published on Monday.

Under the new measures, Cubans will be able to open restaurants, repair
homes and cars, train animals, sell wine, provide transport, work as
clowns and open many other businesses, some currently prohibited by the
communist-led government.

"I hope this licence will bring me a better future," the Associated
Press news agency quoted Lazaro Ramos, who was one of about 20 people
waiting outside a government office in Havana's 10 de Octubre
neighbourhood, as saying on Monday.

Ramos, 34, said he was unemployed but was hoping to get permission to
make piñatas for children's parties. "The economy is not good. But with
this, I will be able to make ends meet."

Simplified tax system

Under the rules detailed in the Gazette, authorities said the majority
of the country's new self-employed license owners will be eligible for a
simplified tax system that establishes a monthly quota regardless of

For example, parking attendants would pay 80 pesos ($4) a month, while
typing instructors would have to pay more than 100 pesos ($5) monthly,
and barbers would be forced to pay the highest fees at 200 pesos ($10) a

Those not eligible for the simplified tax system - with jobs such as
taxi driver, plumber and rooming house operator - will pay a 25 per cent
income tax on the first 10,000 pesos ($476) earned each year, with the
rate rising for those who earn more.

Income exceeding 50,000 pesos ($2,381) a year will be taxed at 50 per cent.

State worker layoffs

The guidelines are part of a plan to deal with some half a million state
workers to be laid off by March 2011. Authorities announced on September
13 that the government would lay off 500,000 workers and absorb many of
them into the private sector.

The new rules will allow Cubans over the age of 17 to start their own
business, so long as they are permanent residents.

Cuba's inefficient economy, crippled by a US trade embargo for nearly
five decades, has been suffering for years, and the government of Raul
Castro has begun to allow an expansion of small-scale private enterprise.

Similar steps were taken in the 1990s as Cuba struggled to survive when
its economy collapsed after the fall of the Caribbean island's principal
benefactor, the Soviet Union.

In 1996, the number of self-employed peaked at 209,000, but when the
economy improved, the government, in the name of ideological purity,
backed off the reforms and restricted the issuance of new licences.


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