In his annual presidential report to the nation, President Rafael Correa said Sunday that Ecuador’s economy and financial systems are performing better than predicted, and that levels of poverty and inequality are in decline. “We have not reduced spending on any major project that will improve the lives of our citizens,” he said. “We are on schedule despite the loss of revenue from lower oil prices,” he added.
He also said he was sending proposals to the National Assembly to raise inheritance and capital gains taxes. “To continue our efforts to achieve equality and reduce poverty in our country, we must stop unjust and unearned gains, and give that money to our cities to provide higher levels of public service,” he said.
Correa said infrastructure improvements remain on tract, saying that 11 hospitals, 36 health centers, 62 children’s centers, 52 schools and educational facilities, and five entrepreneurial centers have been built within the past year. “In total, the per capita social investment has risen from $141 in 2006 to $575 in 2014,” he said.
“We still have work to do to become a more just and productive country,” Correa said. “We have made great advancement in reducing poverty but we can’t rest until we eliminate it. The most important thing this government has done is to reduce poverty and inequality.”
Details were not available on the increases to the inheritance and capital gains tax, although Correa said he would propose that the threshold at which the inheritance tax would apply be lowered to $35,400, which represents 100 basic salaries of $354. Currently, the threshold is $68,880.
An assemblyman from Correa’s País party said he understood the capital gain rate could increase to 50% of municipal assessed property values, not the purchase price of property, but said most of the details will be worked out in the Assembly.
“I will face the political cost necessary to increase this revenue for social causes,” Correa said.
He cited cases of land speculation where owners make “obscene” profits. “In some cases, this has forced the government to spend five times what it should have to to buy land for public purposes. We must put an end to this form of illicit enrichment.”