Granma newspaper (the country’s official organ) recently published a detailed explanation of how the new taxation system will be implemented in relation to self-employed workers.
There are many Cubans who, as a palliative to their being categorized as “surplus” on their jobs, have found no other option than to seek to support themselves through this type of work. Alternatively, others who have been discouraged for a long time by the excessively low wages have opted to get into some type of self-employed business. They’re objective is to make their incomes slightly higher, allowing them to survive in the midst of a society swollen with shortages.
On a first reading, it seemed that this option certainly satisfied a need that a Cuban supported by their wage couldn’t. However, when we analyze the system of taxes they’ll have to shoulder, we realize that the life of the average Cuban will continue to be hard.
Sparing the tediousness of complicated explanations, it suffices to say that after discounting for expenses generated from self-employment activities (generally 40 percent of all revenue), each Cuban must pay a long list of taxes. The largest of them is the tax on private income, which on average represents 30 percent of revenue.
In the end, each Cuban will “enjoy” only 30 percent of all their income, “30 percent of all their effort.”
The basic example illustrated by the newspaper refers to the owner of a cafeteria who, after deducting all their taxes, is left with a net 30,000 pesos a year, or 2,500 pesos a month (equivalent to 100 CUCs when exchanged). As we know this figure only covers basic expenses of a nuclear family devoted to that type of business.
But what can one do? To Cesar, that which is Cesar’s. Hopefully better times are ahead.