Cuba unveils new tax system - and a beginner's guide to the concept

Published on Friday 22 October 2010 16:21

Cuba has laid out details of a sweeping tax system for the newly self-employed - a crucial step in the socialist state's plan to convert hundreds of thousands of state workers into private business owners.

The tax code described in the Communist Party newspaper Granma yesterday will have many Cubans paying more than a third of their income to the state, while those who create businesses and hire their own employees will pay more.

Cuba announced last month it was laying off half a million state workers - nearly 10 per cent of the work force - in president Raul Castro's biggest reform since taking office in 2008.

At times, the article reads like a children's lesson for a population with little experience at entrepreneurship - and almost none with the concept of taxes.

Throughout, there is an attempt to soften the blow by explaining that no government can provide services without revenue.

"Perhaps because Cubans are used to receiving medical care without taking a penny out of our pocket, or studying for free at any educational centre, few stop to ask where the money comes from," the article reads.

Those selling goods and services will pay a 10 per cent income tax monthly, as well as another 25 per cent into an account from which they will draw a pension.