Ecuador: Correa aims for more debt and taxes

The earthquake in Ecuador on April 16, which resulted in 659 deaths (a figure that is still growing) and thousands of homeless, has also added to the population’s tax burden. The Government has increased VAT from 12% to 14% for a one year. For the same period, companies will pay a 3% tax on profits and individuals with assets worth more than a million dollars will pay a one-off 0.9% contribution. People who earn over a thousand dollars per month will forfeit one day’s salary each month; those making more than $2,000 will pay two days and so on, up to $5,000 a month and five days’ earnings. This tax package was sent to the National Assembly on Friday 25 April marked as urgent, i.e. to be processed within a maximum of 30 days.

It is not known how much revenue the Government will make from these measures. The majority will come from VAT, which last year totaled $500 million per percentage point, a figure which is set to decline this year due to the fall in consumption. Optimistic estimates have predicted that the new tax package will bring in $1.5 billion, but economic analysts project a lower sum. Alongside the tax measures, the Government has also reported that it has negotiated $600 million in contingency loans with the IDB, CAF and the World Bank.MOVING TO ECUADOR – ALREADY LIVE THERE? THIS BOOK WILL REVEAL MANY ASPECTS OF THE CULTURE – READ THIS BOOK

For the same period, companies will pay a 3% tax on profits and individuals with assets worth more than a million dollars will pay a one-off 0.9% contribution. People who earn over a thousand dollars per month will forfeit one day’s salary each month; those making more than $2,000 will pay two days and so on, up to $5,000 a month and five days’ earnings. This tax package was sent to the National Assembly on Friday 25 April marked as urgent, i.e. to be processed within a maximum of 30 days. It is not known how much revenue the Government will make from these measures. The majority will come from VAT, which last year totaled $500 million per percentage point, a figure which is set to decline this year due to the fall in consumption. Optimistic estimates have predicted that the new tax package will bring in $1.5 billion, but economic analysts project a lower sum. Alongside the tax measures, the Government has also reported that it has negotiated $600 million in contingency loans with the IDB, CAF and the World Bank.Read Article