NPR’s Weekend Edition
Saturday, October 18, 1997

From a story by Tom Gelten, reporting from Havana:

.... Private citizens in Cuba have also looked to the tourism industry to solve their economic problems. Wages in the state-controlled economy average about $20 a month or less, and many Cubans have turned to taxi driving or street vending to make ends meet. In Havana and other cities, people have been renting out their own apartments to foreign tourists.

Maximo Fermeta, otherwise unemployed, shows off the 2-bedroom apartment he and his wife have made available to tourists. It has hot running water, a dining room, and a balcony on the street. “And I don’t charge much,” he says, “$15 a night.” For $100, he says, people happily spend a week here.

The idea of renting an apartment, or just a room in an apartment, became popular with foreign tourists, especially those on a tight budget. By March of this year, the Ministry of Tourism was reporting that in Havana more foreign tourists were staying in private rooms than in the state-owned hotels. The government didn’t like the competition; Fidel Castro, who frowns on the whole idea of private entrepreneurship, denounced the apartment rentals in a speech this summer. Taxes on the businesses, he said, would have to be steeply increased.

For Maximo Fermeta, it was terrible news. “They say I’m in a tourist zone between three hotels,” Maximo says, “so the new tax rate for this apartment is $250 a month. Six months could go by before I’d make that much in a month,” he says, but still I’d have to pay the tax.” Rather than lose money, Maximo and his wife just stopped renting their apartment. They say that of all the people they knew who were renting their flats to tourists, no one has been able to stay in the business and pay the new tax.

In fact, the rental tax is one of the most controversial steps the government has taken recently. Among those most affected by the measure are high-ranking Communist Party officials and military officers who have been given fancy homes as a reward for their service and who are making good money by renting them out.

In a recent news conference, the Cuban Vice Minister for Tourism, Eduardo de la Vega, made clear the decision to impose the taxes did not come from his ministry. But he then downplayed the significance of the measure. “Everyone who has to pay taxes complains about it,” de la Vega said. He claimed there are still 1900 private apartment rentals registered in the city of Havana alone, “so I very much doubt,” he said, “that this tax really has had much of an effect.”

Cubans who were in the apartment rental business scoff at that claim, and the government is taking criticism for this measure. Granma, the official organ of the Cuban communist party, this week published a letter from a Cuban citizen who said the tax had forced him to quit renting out his apartment. Such letters, when published in the party press, are generally a good indication that a policy is provoking debate.

The government’s unsympathetic response to the letter showed Socialist thinking still holds sway here. An official from the Finance Ministry wrote that private rentals had gotten “out of control” and that if people were allowed to make “superior incomes,” it would drive prices up in the food market because they’d have more money to spend. “If this activity doesn’t turn out profitable,” the official wrote, “you can look to do something else within the revolution.”

But tourism is one of the few sectors where Cubans can find opportunities to supplement their meager salaries. The people who are renting out their apartments to foreigners were driven to do so by economic necessity, and the government’s crackdown is likely to turn more people here against Fidel Castro and his socialist system.

End of Story.

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