CHANGE IN CUBA? – AT 10:45 A.M. ET: Is the Cuban government finally waking up and smelling the coffee? Apparently, there are some limited economic reforms underway. But, of course, there is no real democracy and no basic freedoms. From CNBC:
Most Cubans have not paid taxes for half a century, but that will change under a new code starting January 1.
The landmark regulations will change the relations of Cubans with their government and are a signal that market-oriented reforms, launched since President Raul Castro succeeded his brother, Fidel Castro, in 2008, are here to stay.
The recently published code constitutes the first comprehensive taxation in Cuba since the 1959 revolution abolished just about all taxes.
In the 1990s after the collapse of the Soviet Union, the country's main benefactor, the Cuban government imposed a few scattered taxes, but mostly preferred to maintain low wages so it could fund free social services.
The government's free market reforms introduced over the last two years, are designed to encourage small businesses, private farming and individual initiative, along with plans to pay state workers more. Under the new tax code the state hopes to get its share of the proceeds.
The government also envisions replacing subsidies for all with targeted welfare, meaning that the largely tax-free life under a paternalistic government is on its way out.
"This radically changes the state's relationship with the population and taxes become an irritating issue," said Domingo Amuchastegui, a former Cuban intelligence analyst who lives in Miami and writes often about Cuba.
The new code covers 19 taxes, including such things as inheritance, environment, sales, transportation and farm land, various license fees and three contributions, including social security.
A sliding scale income tax - from 15 percent for earnings of more than 10,000 pesos (about $400) annually, to 50 percent for earnings of over 50,000 pesos, (about $2,000) - adopted in 1994, remains in the new code for the self-employed, small businesses and farms, but it also includes a series of new deductions to stimulate their work.
For example, farmers may deduct up to 70 percent of income as costs, and small businessmen, who are taxed by income not profit, up to 40 percent, plus various fees and secondary taxes they pay.
COMMENT: If Cuba can move more toward a free-market system, can political freedom be far behind? The Cuban people are a great, hard-working people (see the building of modern Miami), and they will start demanding freedom, especially once the Castro stage show departs the scene.
The worst thing, though, would be for Obama to start indulging the Castros, which is his instinct. We should give only increased recognition in exchange for increased internal freedom.
November 28, 2012