CUBA
NEWS
Cuban entrepreneurs
test small steps in capitalism
By Tracey Eaton / The
Dallas Morning News. February 28, 2004.
HAVANA - Sick of paying income taxes?
Well, it could be worse. Some months, Ariel
Duyos hands over 80 percent of his income
to the government.
But this small-time Cuban capitalist isn't
complaining. He makes more money than the
island's top brain surgeons and nuclear
physicists, 11 years after Fidel Castro
- trying to provide relief during hard economic
times - allowed the first wisp of free enterprise
to seep into the socialist system. Still,
capitalists in the Western hemisphere's
only communist country don't have an easy
time. They pay some of the world's highest
taxes, they endure mountains of red tape
and they regularly tangle with government
inspectors.
Such difficult conditions have caused the
number of cuentapropistas - or workers on
their own account, as these Cuban capitalists
are called - to drop from 209,000 in 1996
to 149,990 today.
"Cuban officials are taking measures
based on a perception that they have breathing
room," said Philip Peters, a former
State Department official and now Cuba specialist
for the Lexington Institute, a private research
organization in Arlington, Va.
Tourism has rebounded and the Cuban economy
has improved, so officials are not encouraging
growth in the number of cuentapropistas,
Mr. Peters said.
"These entrepreneurs operate in a
tightly limited legal space, but they show
initiative and prosper. They are an indicator
of the degree to which Cuba could generate
new jobs, growth and tax revenue were it
to embrace a genuine small business sector,"
he said.
Fidel Castro has lashed out at cuentapropistas,
accusing them of piling up small fortunes
while other workers, including teachers,
doctors and police officers, barely get
by on low wages.
"The more contact we have with capitalism...the
more repulsion I feel," the Cuban president
said in 1998. "This excess money which
a lot of people have is causing us a lot
of damage."
Cuban Cabinet ministers, engineers and
armed forces officers earn $12 to $23 per
month, according to a 2002 report by the
Institute for Cuban and Cuban-American Studies
at the University of Miami. But those in
the private sector make many times that,
said the study, entitled "Growing Economic
and Social Disparities in Cuba."
Farmers make from $77 to $1,923 per month;
truck drivers from $385 to $770; prostitutes
from $240 to $1,400; landlords from $250
to $4,000; internationally recognized musicians
from $600 to $6,000; and private restaurant
owners from $12,500 to $50,000, the study
said.
U.S. officials say there's nothing wrong
with some Cubans earning more than others
because some people have more talent, intelligence,
energy or skill than others and should be
compensated for it.
"The absence of economic freedom has
been as destructive to prosperity as the
absence of political freedom to human dignity,"
said a Dec. 15, 2003, State Department fact
sheet on Cuba. "The underemployment
of a creative and educated population, coupled
with almost total control of the legal economy
by the centralized state bureaucracy, fuels
a massive illegal economy."
Cuban officials say that workers' benefits,
including free schooling and health care,
easily make up for any disadvantages that
the socialist system may have.
They also say that these workers aren't
discriminated against because of their capitalist
bent and enjoy all the social and retirement
benefits of other Cuban workers.
Cuentapropistas "guarantee important
services to the population," which
is adversely affected by the "criminal"
4-decade-old U.S. ban on trade with Cuba,
said Nestor Iglesias of Cuba's Ministry
of Labor and Social Security.
Mr. Castro makes it clear that he does
not plan any changes or any shift toward
capitalism. He emphasized that point on
Jan. 29 during a five-hour speech at the
Third Hemispheric Encounter of Struggle,
an event that drew participants from 32
nations and is aimed at coming up with alternatives
to a hemispheric U.S. free trade agreement.
Even so, the seed of capitalism planted
in Cuba in 1993 remains alive.
Mr. Duyos sells little wooden boxes used
to store Cuban cigars or whatever else you
have in mind. But whether the 25-year-old
sells any boxes or not, he must pay $159
per month in taxes plus about $2 in rent
for his space at the artisans' market in
Old Havana.
"I think $159 in taxes is high,"
he said. "I'd be happy with $100."
By law, he's allowed to sell his wares
for only 16 days a month, "and sometimes
that's not enough days to make that money,"
to pay the taxes, he said. But he said he
prefers that to working for a state-run
company.
When business is good and tourists are
swarming Old Havana, he said, he earns as
much as $600 a month. When tourism drops,
he said, he makes only about $200. And he
has to pay the $159 tax even when he goes
on vacation.
Lisette Garcias, 38, is another cuentapropista.
She sells figures made of papier-mache and
also pays $159 in taxes per month.
"I made enough working here to buy
a TV, but later I had to sell it to pay
my monthly taxes," she said.
The Cuban government has not made all forms
of private enterprise legal. Cubans are
allowed to work privately in only about
150 occupations. These workers include plumbers,
carpenters, tire repairmen, hairdressers,
bicycle parking lot attendants, taxi drivers
and flower vendors. New licenses are difficult
if not impossible to obtain.
Authorities began imposing income taxes
in 1995, the first such taxes in Cuba in
37 years.
Not all workers pay the same tax. Some
give just 5 percent of their income to the
government.
Still, the restrictions are many. Private
restaurants, for instance, can only have
12 seats and can only employ family members,
although those rules are sometimes broken.
The restrictions fall heaviest on restaurants,
taxis and artisans who compete with state-run
enterprises, Mr. Peters said.
Some workers also say they regularly underreport
their income to pay less taxes.
Jose Ramón Glarai, 72, has been
a cuentapropista for the last six years
and sells used books in Old Havana.
"I make enough to live but not to
get rich," he said. The disadvantage,
he said, is that he sometimes must endure
rain or suffocating heat. But even worse
than that, he adds, is "going through
the stress of not selling anything."
Despite such ordeals, cuentapropistas will
be vital to the Cuban economy in the post-Castro
era, researchers say.
"When a transition toward a true free-market
economy occurs in Cuba, the self-employed
will be an important minority of Cubans
who have worked in small enterprise, who
are familiar with risk taking, investment
and profits, taxes and regulation,"
scholar Benjamin Smith wrote in a 1999 study,
"The Self-Employed in Cuba: A Street
Level View."
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