Thaindian News

Havana, Aug 11 (IANS) In a bid to boost agricultural output, Cuba has passed a new tax law that gives new farmers a tax break for the first two years, the official daily Granma reported.

“With these special tax regulations, the country seeks to stimulate national production, substitute imports, and increase exports,” said the paper Friday.

The Tax Act, which will turn effective in January 2013, has not been published yet, reported Xinhua.

To increase food production, the government of Cuban leader Raul Castro has since 2008 distributed 1.4 million hectares of idle state-owned land to 163,000 private farmers.

The farmers are authorized to sell products to hotels and restaurants.

Authorities have also begun to grant bank loans to private farmers, a move that has been called “unprecedented” by official media.

Modernizing Cuba’s outdated socialist economic model needs to be “accompanied by legal instruments to stimulate the economic sectors, while eliminating factors that hinder national progress”, Granma said.

The government has said it considers food production to be a “strategic national security issue”.

Cuba spends about $2 billion a year in importing food equivalent to some 70 percent of its domestic needs.