After 50 years, taxes reimposed on Cubans

HAVANA—Most Cubans have not paid taxes for half a century, but that will change under a new code starting Jan. 1.

The landmark regulations will change the relations of Cubans with their government and are a signal that market-oriented reforms, launched since President Raul Castro succeeded his brother Fidel Castro in 2008, are here to stay.

The recently published code constitutes the first comprehensive taxation in Cuba since the 1959 revolution abolished just about all taxes.

In the 1990s after the collapse of the Soviet Union, the country’s main benefactor, the Cuban government imposed a few scattered taxes, but mostly preferred to maintain low wages so it could fund free social services.

The government’s free market reforms introduced over the last two years, are designed to encourage small businesses, private farming and individual initiative, along with plans to pay state workers more. Under the new tax code the state hopes to get its share of the proceeds.

The government also envisions replacing subsidies for all with targeted welfare, meaning that the largely tax-free life under a paternalistic government is on its way out.

“This radically changes the state’s relationship with the population and taxes become an irritating issue,” said Domingo Amuchastegui, a former Cuban intelligence analyst wholives in Miami and writes often about Cuba.

The new code covers 19 taxes, including such things as inheritance, environment, sales, transportation and farmland, various license fees and three contributions, including social security.