SANCTI SPIRITUS, Cuba – Andres Valdes, who has daughter living in Hialeah, said he has been cutting the hair of residents of the city of Sancti Spiritus for about three decades.
Valdes works at a family-run barber shop. But before he ran a business as a "cuentapropista," a Cuban who is self-employed, he was a Communist government paid hairstylist.
Fidel Castro referred to the tourism industry as a "necessary evil." Now under Cuban President Raul Castro's reforms, the service industry now has more licensed freelancers. They are allowed to create a service price list, hire workers and get small government loans from the Banco Popular de Ahorro (BPA).
"I think we have had good results with this," Valdes said in Spanish.
The majority of legalized businesses are not designed to generate wealth in a cash-poor market. The focus of the low-skilled ventures is on survival. Although a fortune teller and a clown can run their own business, there is still no room in Cuba for innovation. The government still controls the high-skilled jobs.
Without wholesale markets, it's not easy to have competitive prices or have access to supplies. Now some fear an increase in government taxes on personal income is looming. In October, government officials told Cuban media that they were notifying some 820 "cuentapropistas" in Sancti Spiritus that their taxes were going to increase in January.
At the province of Sancti Spiritus, the government reported there were some 20,380 registered "cuentapropistas" who paid 63,271,800 Cuban pesos ($2.38 million) last year, according to the Escambray, a government newspaper. The sector was growing, as the BPA had provided 268 loans as of July, according to Radio Sancti Spiritus, government media.
The Oficina Nacional de la Administracion Tributaria (ONAT) oversees the payments. The agency warns on their site: From Jan. 7 to April 30, taxes on personal earnings must be paid. Those who pay before Feb. 28 will get a 5 percent discount at the time of payment.
The fees are different for "cuentrapropistas" who work in the transportation or restaurant industries. Since 2013, taxi drivers, known as "boteros," must be registered with an agency and pay taxes on their personal income with the ONAT. And according to a government chart, the tax could range from $13 to $76 a month.
Despite the evolution of the "cuentrapropista," as in most worldwide economies, there remains an unregulated sector that includes seasonal farm workers, artists and spiritual advisers. Government workers often have underground side jobs or businesses due to their low income.
At Valdes' barber shop, near the doorway, Carlos Suarez is hard at work. He is fixing and refilling used lighters. Most Cubans can't afford to toss out their lighters and buy news ones, so he has been able to make a living this way for decades.
Suarez charges between 7 to 8 cents to repair a lighter and makes about $4 a day. He will not be affected by the tax increase, allegedly designed to target those with higher incomes.
