Conaie’s economic plan: Tax the wealthy but leave gasoline and diesel subsidies alone

Nov 1, 2019 | 22 comments

According to the leadership of the Confederation of Indigenous Nationalities of Ecuador (Conaie), the solution to Ecuador’s economic troubles is simple. “Our proposal is to raise taxes on the companies and individuals who can afford to pay more,” says Conaie President Jaime Vargas. “They have never paid their fair share and it is time for this to change.”

Conaie President Jaime Vargas greets José Agusto Briones on Thursday.

Vargas delivered Conaie’s plan to José Agusto Briones, general secretary to President Lenin Moreno, on Thursday morning at the Catholic Church’s Ecuadorian Episcopal Conference Center in Quito.

The Conaie plan does not support the elimination of fuel subsidies but instead demands that the government increase efforts to stop smuggling at the Colombian and Peruvian borders. Recent studies report that about 20 percent of Ecuador’s subsidized gasoline and diesel fuel go into out-of-country vehicles at a cost of more than one billion dollars annually.

Conaie’s plan includes one tax reduction, a two percentage decrease in the IVA tax, from 12 percent to 10 percent.

Among the tax hikes on the wealthy, Conaie wants to impose a flat five percent charge on companies that earn more than one million dollars a year and increase income tax for high-income individuals by four percent. President Lenin Moreno is proposing tax increases for both companies and individuals but at far lower rates. Conaie says its plan will raise $7 billion a year.

Vargas said that the Conaie plan protects the poor while the government’s proposals do not. “We hear much talk about taking care of the poorest segments of the population but the plans we have seen place unfair burdens on those least able to afford it,” he said. “This is why we reject elimination of fuel subsidies which directly affects transportation costs.”

He added that Coanie is not concerned with agreements the government made with the International Monetary Fund. “Our priority is the people. If they made bad deals they will have to change them.”

Although the finance ministry said Wednesday that it will propose new plans to reduce subsidies, Moreno said Thursday that no proposals will be announced without discussions with Conaie and other parties. “We made an agreement October 13 to include various social sectors in the decision-making process and we will abide by that.”

Moreno said he hoped that discussions will begin next week.


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