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    The Private Sector Consolidates Its Presence in Gastronomy and Services

    The Private Sector Consolidates Its Presence in Gastronomy and Services
    / 14ymedio, Marcelo Hernandez

    14ymedio, Marcelo Hernandez, Havana, 1 March 2017 — The corner of
    Galiano and Zanja is a hive of people at noon. The area’s private cafes
    sell everything from bread with croquettes to a complex meat lasagna,
    but the nearest state places only sell cigarettes. A third of the
    food services in Cuba are managed privately or by cooperatives, a sector
    that is attracting a larger and larger clientele.

    According to public statements in Monday’s official press from Interior
    Minister Mari Blanca Ortega, 32% of food, personal and technical
    services operating on the island “have moved to non-state forms of
    management.” This formula now seeks to “achieve more quality and
    efficiency,” says the official.

    In the last two decades, the scene in the nation’s streets has been
    transformed with the appearance of timbiriches – tiny private businesses
    – sales counters in the doorways of houses, all the way to restaurant
    complexes serving Creole and international food. But the sector is still
    burdened by the absence of a wholesale market and a strong tax policy.

    “The taxes are very high,” says Dario, who manages a small fruit and
    snack store near the Military Hospital in Havana. “The account doesn’t
    balance because the products have gone up a lot of price and I have to
    pay the Office of the Tax Administration (ONAT) almost half of what I
    earn in a year,” he complains.

    Right now, more than 200,000 workers, of whom at least 170,000 are
    self-employed, must submit their formal declarations of accounts. Those
    who have annual incomes in excess of 50,000 Cuban pesos (about US
    $2,000) must pay the Treasury up to 50% of the total earned.

    Darío says that in the area where he works “many small businesses have
    closed because they have not been able to maintain a stable
    supply.” However, at the national level the numbers have grown, albeit
    slowly in recent years. By the end of 2016, the country had 535,000
    self-employed workers, according to data from the Ministry of Labor and
    Social Security.

    The most common activities are the preparation and sale of food, the
    transport of cargo and passengers, the rental of dwellings, rooms or
    spaces and telecommunications agents.

    Cases of tax evasion are common. Recently ONAT indicted 223 of these
    entrepreneurs in court. If found guilty they could face sentences of up
    to eight years in prison, ONAT’s legal director, Sonia Fernández, told
    the official media.

    Outside a bakery on Carlos III Avenue, several of the self-employed were
    waiting Monday to supply their businesses. “I come every day and buy
    about 30 flautas, but sometimes I have to wait up to two hours to get
    goods,” says Migdalia, a cafeteria employee at nearby Calle Reina.

    The bakery belongs to the retail network and the line alternates
    entrepreneurs and customers who only want to buy for home
    consumption. “If behind me someone buys wholesale, I’m left with
    nothing,” protests a retiree who considers that “the normal consumer is
    affected” when he must stand in line with small businesspeople.

    Due to shortages affecting domestic markets, other products must be
    imported directly from abroad. “All the olive oil and Parmesan cheese we
    use we have to bring in from the outside,” said the administrator of a
    busy Italian restaurant in Havana’s Chinatown, insisting on anonymity.

    In September 2014, new resolutions of the General Customs of the
    Republic attempted to restrict shipments of goods for commercial
    purposes by air, sea or postal. But the flow of products to the private
    sector has not stopped.

    “I cannot tell a customer that we are not making a dish because there is
    no nutmeg in the country or because I ran out of sesame,” complains the
    manager of the Italian restaurant. “When people come here they want to
    see that everything on the menu is being served; to guarantee that, you
    have to import many ingredients,” he says.

    A report published a few days ago from the Economic and Trade Office of
    Spain in Havana says “the lack of stable access to raw materials and
    supplies necessary for their activity” as one of the greatest
    difficulties that the self-employed and cooperatives must face.

    The lack of legal status is also at the root of most of the problems in
    this sector.

    In spite of the rapid growth in numbers, and the contribution to the
    gross domestic product made by entrepreneurs and cooperatives, these
    forms of management have not been able “to squeeze into the productive
    fabric with sufficient force, due to the strong regulation and legal
    obstacles they encounter.”

    Source: The Private Sector Consolidates Its Presence in Gastronomy and
    Services / 14ymedio, Marcelo Hernandez – Translating Cuba –