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Ethics

Business ethics of small businesses in Cuba Essay

November 4, 2020 by Essay Writer

Being in business, you can either earn or gain bad or good reputation. This is because to some people, their aim with businesses is to make money something that can be termed as capitalism. However, it is not wrong to run business with an aim of making money; the issue lies in the fact how the company performs its business activities in terms whether their are ethical or not.

Business should think beyond financial growth and competition as a way of being successful instead they should be conducted it an ethical way that serves the community in which it is allocated rightly. It is crucial that every business to have good business ethics and therefore they should consider different factors before conducting business as this will enable business owners to know whether the business they are conducting has good ethics (Boldrin & Levine 2008, p. 122).

For example when an organization conducts business with another company, it can be considered unethical behavior since the first company has got its own responsibility and having links in the chain is what makes it unethical businesses.

You have to realize that every time an organization makes decisions or a choice, it mainly reflects on its personal commitments and values indicating the kind of business it is and the way in which it is organized (Andersen 2006, p. 110). It is therefore crucial to know what business ethics means.

Business ethics is a type of professional ethics or applied ethics that mainly scrutinize moral problems or ethical principles that rise in the world of business.

Business ethics is relevant in all facets of business conducts and individual’s conducts. Business ethics usually aims at determining fundamental purpose of most businesses. Most businesses have ethical codes that governs the activities that takes place in the environment, what should and what should not be done (Fincham & Rhodes 2005, p.165).

It is therefore crucial that every business to have good business ethics since that is the only thing that will prevent them from exploiting the public. Many companies do not usually care of ethics as they are too concerned with gaining money. This is why you find that most major brands have been found breaking ethical business laws which usually lead them to heavy fines. This is because making money is their major aim not considering the public health or even the economic status of the world.

Most companies usually break anti-trust, environmental and ethical laws which lead them to receiving fines worth millions. However the major problem that exists is that most major companies make more money that outweighs the applied fines (Giddens 1990, p. 213). The constant desire to increase its outcomes makes the companies forget about running their business according to the ethical principles and codes.

It is, therefore, up to the public to ensure that companies adhere to business ethics. Business ethics is applied to everything from making paper to cutting down trees with an aim of making profit (Frederic 2002, p. 68). The public should not let businesses take pride in the profits they make instead they should take it upon themselves to ensure that they follow correct business ethics.

Paying of tax is one example of ethical conduct that every business should adhere to. Though most business usually indirectly inflicts the cost of taxation to the customers by raising the prices of goods but so long as they pay taxes, such kind of business is considered appropriate and acts legally (Machan 2007, p. 110).

A good example of paying taxes as an ethical conduct is illustrated in an article obtained from BBC News Website taking about how adhering to ethical conducts of paying taxes has helped the economy of Cuba grow. Most private sectors have learnt a good tax lessons which has enabled them to grow. Taxation has become a process that fills capitalist world yearly and for the first time, Cuban Communist-run has taken the initiative to fill their tax returns.

Despite the fact that the government has taken more than a year to increase the number of licenses for private businesses in Cuba, these companies are still willing to fill in tax returns. This is what is termed as good business ethics. This shows how these privately owned businesses have good manners and not even the short comings of the government will stop them from obeying the law of good business ethics.

The new entrepreneurs in Cuba are free to earn as much as they can as compared to the small state salary that most workers usually get but unlike the state employees, they are paying taxes (Pinnington, Macklin & Campbell 2007, p. 106) In Havana, watch repairers, myriad DVD dealers and fritter sellers usually jostle on the roadside for customs with an aim to earn more. In the past, private sectors and new entrepreneurs never used to pay taxes and this means that this is a new concept which everyone has to get used to.

However, despite this being a challenge to small scale businesses, they decided to adhere to the law since they are allowed to walk in the streets of Cuba in search of customers. Personal income tax was abolished in Cuba in 1960s by the Revolutionary leaders. They never liked the idea of small enterprises paying taxes and this led to the decline of Cuba’s economy.

After this policy had been re-established again, the economy of Cuba started to increase since most businesses people are faithful and adhere to the business ethics code (Rainsford 2012).

Actually, the Cuban government reinstated the law in 1990s when it allowed private businesses to operate again an action which soften the blow as subsidies from Soviet in the island disappeared with USSR. Today, more than 358,000 Cubans which makes 9% of the workforce are registered by the government as self-employed or cuenta-propistas (Rainsford 2012, p. 1)

The Cuban government has taken the initiative to explain to the business owners more about the new tax policy of filling in tax returns. The Havana tax office is opened all the time since they allow private business owners to seek advice or consultation on areas they do not understand (Rainsford 2012, p. 1).

Long queues have been recorded in the office and this shows how dedicated the citizens are. The business owners are willing to sacrifice their time to ensure that their businesses operate under the code of ethics set by the government. This is actually an ethical practice among the private business owners.

The Havana tax office notice-board is covered with drawings explaining how the system works. This is meant for the illiterate people who do not know how to read well hence the pictures clearly elaborates what is expected of them (O’Neill 1998, p. 220). These posters also remind those who are paying the taxes for the first time that their contributions are valuable to the state and that they are not a waste.

According to the author of the article, most of the private business owners find this law strange since they are not used to it. Some do extra jobs to make ends meet since the state pension is less and the money they earn from their businesses is not also much since it is being taxed. One of the businesses owners interviewed by the author of the article in BBC News Website confessed that they are finding it difficult to pay the monthly fixed-rate tax for their businesses since the income tax is being calculated on top of it.

A case of a couple who found it hard to pay a room they rented and caused damage that is still being prepared is also presented as how hard people struggle to make ends meet because of the new policy. However, the private business owners confessed that despite the challenges they still have to pay the tax as it is one of business code ethics that must be adhered to (Redman & Wilkinson 2006, p. 135). They cannot afford to disobey the law and that is why they are struggling to make ends meet after paying the tax.

The Cuban private business owners clearly indicate that they are catching up with the new process. All they need is a time to catch up with it since it is a new system that needs to be polished and having more experience will enable them understand and cope up with the challenges involved.

The Cuban government has also made adjustments to help out private business owners. They want to double the annual threshold income tax to about 10,000 pesos, however, this initiative is just a suggestion but it has not yet been applied (Rainsford 2012, p. 1). More than 90 activities in Cuba have currently been taxed using a simplified system with a fixed monthly payment without paying attention to the fact how much one earns (Rainsford 2012).

Thus, as stated by Rainsford in her article, “palm-tree trimmers are the lowest contributors at 20 pesos a month” (2012, p.1). However, the companies running these businesses have a potential to gain more profit. They have a sliding scale of 50% for all the earnings above 50,000 pesos in a year (Rainsford 2012, p. 1). According to an economist interviewed by the author of the article, Cuba is in a critical situation and therefore its government needs to update its economic models.

Due to major challenges that Cuba has experienced such as by squeezed for five decades by United States trade embargo, hurricanes damages and island battering that they faced in 2008 which led to multiple financial crisis, the nation needs to fund its system (Clegg, Kornberger & Pitses 2008, p.220).

The Cuban government should subsidize products, offer free universal health care and education to help recover all the damages caused by the challenges the country faced in 2008. The reforms on taxation are mainly to help see more productivity and efficiency in the country. This is why the citizens especially business owners have to play a major role of paying the taxes; they should not only receive from the state but be real contributors.

The Cuban government plans to cut down on costs by reducing a lot of state jobs so that people start to venture in their own private businesses for them to start contributing to the state budget by paying taxes (Rainsford 2012). This means that Cuba’s accountants are to brace themselves and that is why they are attending state-run courses to learn more about the new tax system that their government has implemented (Jones & Parker 2005, p 200).

Many Cubans are now becoming cuenta propustas figuring out other citizen’s tax returns. Actually making payments through taxes has become a good business in Cuba since the business owners adhere to business ethics which will contribute to the economic rise of Cuba. However, other people things that there are high taxation risks since it will strangle most businesses. This was an opinion of one of the clients interviewed by the author of the article about Cuba.

A research shows that most business owners have decided to lie about how much money they make that should be tax. This is not good business ethics but the business owners are forced to lie because they earn less in their businesses yet the taxmen will want the exact taxable amount not understanding the challenges they go through to make ends meet back at home (Cory 2004, p. 145). It is hard to evade paying taxes since the economy functions largely on business owner’s cash.

Expansion of small businesses in Cuba has netted the state. The country has earned 1billion pesos out of the expansion and this is because the business owners have adhered to taxation ethics. Many workers have moved out of the shadow economy and are now well off. About 75% of new self-employed people are now taking part in the development of Cuba. Many businesses struggled due to the new tax reforms however; there are others that managed to fold.

Those businesses that survived are better off now despite the high taxes charged on them; they have learnt to manage their businesses and personal life despite the high taxes put on them. The money in the country and that is why most businesses are better off than they were in the beginning when the new tax policy was reinstated.

In conclusion, business owners should think beyond financial growth of the business and competition as a way of being successful instead they should be in an ethical way by contributing to the nation. The article analyzed in this essay clearly shows the importance of adhering to business ethics, it will not only promote economic growth of the nation; it will also promote growth of the businesses.

List of References

Andersen, B 2006, Intellectual property rights: innovation, governance and the institutional environment, Edward Elgar Publishing, New York.

Boldrin, M & Levine, D 2008, Against Intellectual Monopoly. Cambridge University Press, Cambridge.

Clegg, S, Kornberger, M & Pitses, T 2008, Managing & Organizations: An Introduction to Theory and Practice, Sage, London.

Cory, J 2004, Activist Business Ethics, Springer, Boston.

Fincham, R & Rhodes, P 2005, Principles of Organizational Behavior, Oxford University Press, Oxford.

Frederic, R 2002, A Companion to Business Ethics. Blackwell, Massachusetts.

Giddens, A 1990, The Consequences of Modernity, Polity, Cambridge.

Jones, C & Parker, M 2005, For Business Ethics: A Critical Text, Routledge, London.

Machan, T 2007, The Morality of Business: A Profession for Human Wealthcare, Springer, Boston.

O’Neill, J 1998, The Market: Ethics, Knowledge and Politics, Routledge, London.

Pinnington, A, Macklin, R & Campbell, T 2007, Human Resource Management: Ethics and Employment. Oxford University Press, Oxford.

Rainsford, S 2012, “Cuba economy: Tax lessons as private sector grows,” BBC News, 18 February, via bbc.co.uk.

Redman, T. & Wilkinson, A, 2006, Contemporary Human Resource Management: Text and Cases, FT Prentice Hall, Harlow.

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