Cuba’s National Assembly is meeting and yesterday heard the annual year-end presentation by economy minister Marino Murillo (Reuters story here based on the televised portion). Today’s Granma runs a long transcript of part of the session including Murillo’s remarks, some Q&A, then the remarks of finance minister Lina Pedraza, wherein she previews soon-to-be-released proposals to change Cuba’s tax system.
The headline reads: “2010 economic results and proposed plan for 2011. Updating of tax policy.”
With all due respect, I think Minister Pedraza deserved the headline.
She started with a discussion of Cuba’s current tax law and tax policy, on the need for Cubans in general to understand the role of taxation in sustaining social services, and on the tax-related elements in the policy guidelines that were published recently in advance of next year’s Communist Party Congress.
As a preamble to her explanation of the new tax proposal, Pedraza lets on that “by 2015 approximately 1,800,000 people will join the non-state sector in new forms of management [gestión].”
As for the proposal itself, these are elements under discussion:
- Taxation of private farmers.
- Application of sales taxes in state enterprises for wholesale and retail transactions, and a specific tax to be paid by hard-currency stores.
- A value-added tax has been considered and ruled out for now.
- Reduction in taxes paid per employee by businesses.
- Expanding the use of dedicated taxes to finance environmental protection projects.
- Directing greater amounts of tax revenue to local governments.
- In the future, taxation of state-sector salaries.
- Taxes on residential property “una vez que se flexibilicen las formas de transmisión,” which sounds like yet another hint that property sales may be permitted.
- A special tax on people who are able to work and do not work, as a contribution in consideration of social benefits that the government provides.
Finally, Pedraza cites the need for a new tax law to encompass all the changes.
There is a lot more in her remarks – especially about the thinking behind current and future tax policies – much more than I reflect here, and they are worth reading for yourself.