Cuba slows down self-employment sector

Officials stop issuing licenses to self-employed Cubans

By Hatzel Vela , Andrea Torres - Digital Reporter/Producer

HAVANA, Cuba - About seven years ago, Cuban President Raul Castro stepped away from his brother Fidel Castro's view of the island's business owners as "a class of parasites" who were able to "prosper from the work of others." 

When Raul Castro implemented his economic reforms on the communist island, some were able to turn their homes into small restaurants now known as "paladares" and others were able to run bed and breakfast operations now known as "casas particulares."

Some Cuban-Americans in Miami viewed investing in this sector as an opportunity to be able to help improve the lives of the relatives they left behind. And instead of waiting for a government job, teenagers started to dream of having their own business.

The rules of the game changed Tuesday.

"New authorizations for group activities will not be given until the perfection of self-employment has been achieved," a government announcement published Tuesday in the Granma newspaper said. 

Cuba's Communist government announced that they will temporarily suspend issuing new licenses to entrepreneurs. Cuban officials estimate there are nearly 568,000 Cubans who are self employed -- about 12 percent of the work force .

DOWNLOAD: Here is the government's list

Officials assured them that the new measures are not meant to roll back the development of the sector, but to improve it. Authorities are working on fighting fraud and tax evasion by developing a policy that would require the licensed self-employee to use verifiable bank accounts. 

"Putting the house in order is the highest priority," the announcement said. 

During his most recent speech to parliament, Raul Castro said they were not renouncing the development of the private sector, but it was necessary to "confront the illegalities and other deviations from the established policy."

To avoid defying the socialist ideal of equality, Cuban officials want to make sure that no one but the government is getting rich. Entrepreneurs have to pay monthly taxes and turn over about half of their net-profit earnings to the government.

Owners of "paladares" also face the challenge of supply. They don't have access to bulk vendors or wholesaler purveyors with competitive prices. But they do have access to the black market, also known as buying "a la izquierda," which cheats the government-controlled supply chain.

Cuban officials are also trying to figure out ways to prevent entrepreneurs from feeding the booming black market or engaging in money laundering. How or when Cuban officials will do this remains an enigma. 

Local 10 News Andrea Torres contributed to this story from Miami. 

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