Communist-run Cuba puts brakes on private sector expansion

By Sarah Marsh

HAVANA (Reuters) - Communist-run Cuba said on Tuesday it was suspending issuing new licenses for certain private-sector activities from bed-and-breakfasts to restaurants until it had implemented new measures to curb wrongdoing such as tax evasion.

The move marked a pause in Cuba's seven-year old push to expand self-employment in a bid to cut the bloated state payroll and boost the ailing, Soviet-style economy, and will come as a blow for many Cubans hoping to strike off on their own.

"The regulation states that new authorizations for a group of activities will not be given until the perfection of self employment has been achieved," the ruling Communist Party newspaper wrote.

According to a resolution published on Tuesday in the Official Gazette, the government has temporarily suspended licenses for those wanting to rent their homes, open a restaurant or cafe, or provide construction services.

Also affected are would-be music or language teachers, party organizers and a handful of other professions.

Cuba will also definitively no longer be issuing licenses for wholesale and retail sellers of agricultural goods, vendors of CDs or DVDs, and operators of recreation equipment, according to the gazette.

The number of self-employed on the island has more than tripled to 567,982, some 12 percent of the total number of employed, since President Raul Castro in 2010 launched his plan to expand private enterprise.

But Castro said in a speech to parliament last month that the government had detected wrongdoings in the sector, from tax evasion to the use of goods of illicit provenance, that it needed to curb before expanding further.

"We are not renouncing the development of the self-employed sector," said Castro. "However, it is necessary to respect the laws, consolidate what we have achieved ... and resolutely confront the illegalities and other deviations from the established policy."

He said the government had agreed on a package of such measures that it would publish in due course.

On Tuesday, Granma wrote that Cuba would start requiring certain entrepreneurs such as bed-and-breakfast owners, builders and restaurant owners to use bank accounts that the tax authority could verify.

"The Cuban state's utmost priority is to put its house in order," Granma wrote.

(Reporting by Sarah Marsh; Additional Reporting by Nelson Acosta; Editing by Jonathan Oatis)