The Cuban Government published a series of small business reforms in the state-run newspaper Gaceta Oficial on Monday, that allow for the recruitment of salaried employees in several key industries. The state plans to issue 250,000 self-employment licenses, and made public a list of 178 activities that qualify as legal private-sector ventures, including private restaurants and transportation, which marks a significant shift away from the 1968 legislation that nationalized small business in Cuba.
But there’s a catch. President Raúl Castro’s cabinet also introduced a personal income tax, from 25 percent to 50 percent of revenue, small-business owners and non-governmental labor’s salaries. Cubans who make less than 5,000 pesos (US$255) per year would be exempt from the new tax. Other new taxes include a 10 percent sales tax, a 10 percent real estate tax on Cubans who rent houses, garages or stores, and increased social security contribution of up to 25 percent of personal income.
Monday’s reform is the latest measure that the Cuban government has taken to revitalize an ailing economy. On September 13, the government announced that it would lay off 500,000 state employees over six months. In what is being labeled a possible break from Cuba’s government-dominant economy. The new legislation is intended to create an opportunity for the budding private sector to absorb many of the state’s newly unemployed.
On August 2, Mexicana de Aviación wrote the first pages of its version of Gabriel García Márquez’ Crónica de una muerte anunciada (Chronicle of a Foretold Death) as it successfully filed for bankruptcy. Mexicana argued that rising energy costs and the effects of H1N1 on air travel became too much for the company to bear. However the airline’s business practices have also been questionable for a long time.
Just like in García’s novel, the end result (the death of Santiago Nasar, the main character) became apparent immediately after the bankruptcy announcement. Anyone who had access to a newspaper, TV, radio, or the Internet knew this was the beginning of the end for Mexicana. What we did not know was the amount of time, and more importantly, government resources, this operation and its fallout would require.
Pilot and staff layoffs, air travel chaos, rising prices from Aeroméxico (its main competitor and now the only truly reliable source for national air transportation) and a myriad of customer complaints characterized the weeks that followed the bankruptcy declaration. On October 12, the Senate even announced the creation of a bicameral committee to deal with the break up, acquisition and restructuring of this business mammoth. As Andrew Ross Sorkin would put it, the government decided that Mexicana de Aviación was just too big to fail.
Unfortunately, this situation comes at a time when all major events in