Cuba tightens regulations on nascent private sector

Cuba tightens regulations on nascent private sector

A man waits for clients inside a private vegetable market, next to an image of Cuba’s late President Fidel Castro, in Havana, Cuba December 21, 2017. REUTERS/Stringer

HAVANA, Dec. 22th  (Reuters) – A government official announced tighter regulations for Cuba’s private sector on Thursday as part of a review of market reforms stemming from complaints about excess accumulation of wealth, tax evasion and other practices.

The number of self-employed Cubans has more than tripled to around 580,000, about 12 percent of the total workforce, since President Raul Castro in 2010 launched his plan to expand private enterprise.

In August, however, Cuba suspended issuing new licenses for cooperatives and certain private-sector activities from bed-and-breakfasts to restaurants until it had implemented new measures to curb wrongdoing such as tax dodging.

Private cooperatives will now be limited to the province where they were located and levels of income capped for their leaders at no more than three times the average wage of members, state-run media quoted Marino Murillo, head of the Cuban Communist Party’s reform commission, as saying on Thursday.

Business licenses will be limited to a single activity per entrepreneur, he said. Currently some restaurant owners also run bed-and-breakfasts or cafeterias and cooperatives often operate in more than one province. This would no longer be possible.

In Cuba, only certain types of small businesses and private activities are allowed.

Murillo, speaking to a closed-door session of the National Assembly, was quoted as stating those activities would be reduced and in some cases consolidated, for example manicurist would now fall under a general expanded beauty salon license.

Small business tax policy was also under review, he said.

The measures come even as Cubans say their businesses are already suffering from travel restrictions and warnings issued by the Trump administration.

The government earlier had also definitively stopped issuing licenses for wholesale and retail sellers of agricultural goods, vendors of CDs or DVDs, and operators of recreation equipment.

The backtracking on the private sector hints at unease among some in the ruling Cuban Communist Party that free market reforms may have gone too far, amid a broader debate about rising inequality on the island.

The average state monthly wage is $30, the same sum a B&B owner can charge visitors for a night’s stay.

Castro, speaking to the National Assembly in July, said the government had detected wrongdoings in the sector, from tax evasion to the use of goods of illicit provenance, that it needed to curb.

“We are not renouncing the development of the self-employed sector,” said Castro. “However, it is necessary to … resolutely confront the illegalities and other deviations from the established policy.”