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The challenge in Cuba's free-market reforms

Will Cuba's unlicensed nannies, gardeners and dog trainers be willing to pay taxes?

It’s also not clear how the government will cope with the enforcement burden of regulating the new private sector. The list published Friday even specifies the characters Cubans can depict as street performers.

But the logistics might not be as important as the ideology.

For more than a year, the Raul Castro government has been laying the groundwork for these changes, encouraging Cubans to engage in more candid discussions of the country’s economic problems in both neighborhood meetings and state-run media such as Granma.

The result is a re-casting of Cuban socialism as a system that increasingly accepts a role for the private sector and links productivity to worker income. Cubans will also now be able to hire workers who aren’t family members, something already widely practiced on the black market, but ideologically taboo until now.

More importantly, perhaps, the changes will require Cuban government officials to accept that it is a waste of time and resources to try to stop people from making and doing things to earn a living — especially when they become prosperous. Existing inequalities will inevitably widen with the measures, so the Cuban government will have to begin directing assistance at the neediest, another departure from the island’s experiment with egalitarianism.

“Those who contribute more will receive more — that is the principle of our new tax system, which will help raise revenue for the state, and achieve an adequate redistribution of resources for society,” read Friday’s Granma article.

Cuba’s National Bank is studying proposals to provide micro-credits to aspiring entrepreneurs, but analysts expect much of the capital for small businesses will come from Cubans living abroad. The island receives an estimated $1.2 billion a year in cash send home from Cuban expatriates.

Decrepit small and medium-sized state-run businesses could be converted all over the island. At a rundown snack stand in one of Havana’s western neighborhoods, 52-year-old Raul Duran makes one kind of sandwich — ham on white bread — in his state job. He said he hadn’t studied the measures but welcomed the change to start a business or convert the operation into a worker-run cooperative.

“Anything new would be a good thing,” he said.