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  • asombra: That “general” in the back at left is really too ugly to appear in public. What a TARUGO.

  • asombra: One of the main factors that convinced my mother she HAD to get her kids out of Castro’s Cuba was her horrified...

  • asombra: Not a problem. The system doesn’t actually need real teachers; what it MUST have is politically reliable minions to...

  • asombra: It will work the way it always has without exception: the way Castro, Inc. thinks will best suit Castro, Inc. in terms of gain...

  • CarlosM2000: The article above is not completely correct. The way it will work is that the state will sell all of the assets (furniture,...

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realclearworld

CATO on Cuba’s ‘new’ foreign investment law: Less liberalizing, more regulations

The devil is in the details as they say. And in Cuba, the devil is always the Castro dictatorship.

Simon Lester at the CATO Institute:

http://3.bp.blogspot.com/_jezflJqR7go/TTJeneK29kI/AAAAAAAAAEg/zfaYytiJ-qw/s1600/cato-logo.gif

Liberalizing Investment in Cuba

I’m no Cuba expert, but I have followed the events of recent years with interest. It seems that there have been tentative steps towards liberalizing the Cuban economy, as well as slightly better economic relations between the United States and Cuba. I’m hopeful the long-term trend is towards Cuba becoming a free market democracy, with normal relations with the United States.

In the short-term, though, I’m frustrated by how the “liberalization” of foreign investment is being carried out there.

[...]

Welcoming new foreign investment is great. Here’s the problem, though: In order to liberalize investment, a government really doesn’t need to do anything fancy. It can just say, “foreign investment is permitted, and will be treated like domestic investment.” Very simple. Furthermore, lower tax rates and reduced regulatory burdens can help encourage such investment. Again, very simple.

In practice, though, governments make this process difficult and less liberalizing. Here, what Cuba seems to have done is offered special tax breaks for new foreign investments, and then subjected receipt of these tax advantages to certain hiring conditions. In effect, it introduces two distortions as part of the liberalization process: favoring new foreign investors over other investors through the tax code and then subjecting the favored investors to additional regulation. 

Read it all HERE.

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