July 6, 1998

Cuba tightens controls on self-employed workers

HAVANA, July 6 (Reuters) - Cuba's communist government has tightened official supervision and control of self-employed workers, increasing the state's bureaucratic squeeze on the island's very small private sector.

The tougher rules, outlined on Monday in an official newspaper, appeared to be a continuation of what critics say is an ideologically-inspired offensive by the authorities against Cuba's self-employed workers, whose numbers have dropped to around 154,000 from more than 200,000 three years ago.

Changes to existing regulations cited by the trade union daily Trabajadores included an effective increase in taxes for self-employed private workers earning hard currency.

The new rules required private workers who earn any hard currency to pay all of their taxes in convertible currency.

Previously they had only been required to pay 75 percent of their monthly tax quota in hard currency. Self-employed workers earning in Cuban pesos would continue to pay taxes in pesos.

Trabajadores, citing official figures, said only around 1,300 self-employed workers were registered as operating in hard currency, the majority of them in Havana.

The tightened legislation, which came into effect in recent weeks, included strict regulations for registering self-employed workers in 157 categories of trades, crafts and services, including the running of home restaurants known as "paladares"

They included requirements for government labour officials to question aspiring self-employed workers about where they intended to obtain the raw materials to practice their trade, and where they had obtained the tools and equipment to do so.

Inspectors were also told to refuse self-employment licenses to jobless, able workers if employment in the state sector was available for them in their region.

The government, citing Cuba's constitutional identity as a socialist state, has defended its actions, saying there is a need to order and regulate the self-employed private sector and to prevent the illegal use and diversion of state-owned resources.

Authorities say private self-employed workers earn much more than the average state worker and argue that this income difference should be offset by taxes.

The government's decision to open up and expand the self- employed sector in late 1993 was initially interpreted as a clear sign that communist-ruled Cuba was moving toward a more market-orientated economy.

But since then, many foreign analysts have expressed disappointment at the barrage of regulations and taxes imposed by the authorities on the sector.

The latest regulations specifically tightened restrictions on a number of legal self-employed activities.

For example, carpenters, furniture-makers, upholsterers and mattress-makers were allowed to carry out repairs and take orders for work from individuals, but were prohibited from forming associations for "production and commercialization."

Self-employed computer programmers were banned from teaching this activity or offering word-processing services.