FAIL: Cuba’s economy is collapsing, so communists hike taxes 20%
When your economy is falling apart, what’s a good way to not have a private sector?
Do what Cuba is doing — blame the tiny private enterprises for the state’s economic mismanagement, and tax the hell out of them.
As the economy craters, the Cuban government hits private-sector workers with tax hike. Earnings over just $109 will be taxed at a 20% rate. This has not been previously reported. #Cuba https://t.co/itLWi4D1T3 pic.twitter.com/3CiLNr3GST
— Nora Gámez Torres (@ngameztorres) January 18, 2024
In other words, the beatings will continue until morale improves.
According to an excellent Miami Herald report by Nora Gamez Torres (whose bio says suggests she actually lived in Cuba and knows these bastards well):
In recent years, workers in Cuba have dropped out of the low-wage public sector and state-owned companies to get coveted jobs in the small private enterprises that have mushroomed throughout the island despite strict government controls.
Now, these workers will see the pay they take home reduced by as much as 20%, according to new income tax regulations published in the government’s Official Gazette on Tuesday.
But unlike in most countries where those higher tax rates are designed for the highest earners, in Cuba, where the state monthly salary is equivalent to $15, workers earning as little as $109 a month will be in that tax bracket.
According to the new decree, private sector employees will have to pay a 20% income tax on earnings above 30,000 Cuban pesos, about $109 per month. That’s a 15% tax rate increase from the previous scale set up in 2021, which imposed a 5% income tax for earnings over 9,510 Cuban pesos.
Business owners must automatically deduct the tax payments monthly, the decree says.
There are currently 9,652 small and medium private enterprises, according to government figures. Another 596,000 people are self-employed. Amid rampant inflation and a worsening economic recession, the Cuban government announced in late December and earlier this year a number of cuts in subsidies, price hikes on gas, transportation and electricity, and higher taxes on the emerging private sector in an effort to “stabilize” the economy, officials said.
She notes that Cuban officials say that they’d like more money for social spending, having blown their budget on it earlier, leaving their socialist economy in debt. Others, though, say they really just don’t like the private sector:
Government officials have said they need to collect more taxes to fund social spending, but they have also aired concerns about the continuing of the private sector.
So now the Cuban tax structure for these private enterprises looks like this:
The tax burden on Cuban private businesses now comprises a 35% tax on profits, a 10% tax on sales or services provided, a 5% payroll tax, a one percent revenue tax to support local governments and contributions to social security equal to 14% of workers’ salaries. Owners of the mipymes [state-permitted private enterprises] also have to pay up to 20% taxes on dividends.
Which should do wonders for the willingness of private entrepreneurs to work hard and make profits. If every last profit there is gets taxed by the Cuban government, it’s all but certain that many will Go Galt and stop working. Why work hard when this is the reward in the communist hellhole?
The successor-dictator to Fidel Castro called it his ‘stabilization plan,’ and had this to say for himself:
Amid growing concern among the population about the new measures, the country’s handpicked president, Miguel Díaz-Canel, said during a Council of State meeting this week that “none” will be applied until the necessary “conditions for their implementation were created in the country” and that the process will be “gradual, with special attention to people in vulnerable situations.”
Gamez Torres responded with old-fashioned journalistic skepticism:
It is unclear which parts of the austerity plan will be applied gradually. The price raises for gasoline and utilities are scheduled to begin in February, and the tax increases on the private sector will be applied retroactively to Jan. 1.
In other words, they are raising taxes literally yesterday.
Way to get more private sector.
Who this money-grab “stabilizes” — the private sector is being torched, and the meager takings are hardly enough to satiate the massive communist spending appetite of the Cuban government:
What’s more, it’s perfectly normal for this crap to happen in Cuba because it already has happened in Cuba, any time there is an “opening” in the economy. The government allows a few private enterprises to exist, then as soon as they start to make money, they swoop in and take all the money. It happened in the ’60. It happened in the ’90s. Now it’s happening again.
It’s like a farmer who sows crops, gets them to grow a little, then moves in with the harvester or combine to mow them all down before they’ve even produced something to harvest.
That’s the Cuban government in action.
The bad part is that idiots here in this country think that Cuba is a model. a nation worthy of emulation. Nothing says ‘no’ to that bad idea like this outrageous tax hike. Castroite communists haven’t a clue in the world what it takes to get economic growth. They bite when they should lick and lick when they should bite, as the Soviets used to say.
For the rest of us, they’re a cautionary tale into the economics of socialism and its continuous failures. Socialism fails every time you try it, and today’s Castroites are showing us how it’s done.
Image: Pexels // Pexels License
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