President Guillermo Lasso’s Economic Development Act, which raises taxes on companies and some wage earners, will go into effect without passage by the National Assembly. Due to its classification as “urgent legislation,” the law entered into the Official Registry on Monday after the opposition was unable to muster the 70 votes required to reject it.
According to Lasso, the tax reform is necessary to “maintain the sustainability of public finances.” Among its provision is an additional tax on those earning more than $2,000 a month as well companies showing annual profits of more than a million dollars. The additional taxes will generate an estimated $1.9 billion in annual revenue.
Opponents of the legislation, mostly from the Assembly’s Democratic Left (ID) and Pachakutik parties, are blaming the Correista UNES bloc for allowing the law to take effect by abstaining on the final vote. “They made a secret deal with [President Guillermo] Lasso for this to happen and betrayed what they had previously stated,” said Alejandro Jaramillo of ID. “This is truly despicable and indicates their desperation to regain power.”
Esteban Torres, of the conservative Social Christians (PSC), which also opposes the tax bill, claimed the UNES-Lasso deal is an attempt to save face. “After their embarrassment with the failed impeachment and the lack of support for a national strike they are trying the new tactic of sleeping with the enemy,” he said. “This is truly pathetic.”
The Corresitas are denying they made a deal with Lasso and held a press conference Monday to make their case. “We had our reasons for abstaining but there was no deal,” said UNES leader Paola Cabezas. “Why would we collaborate with a government that has categorized us as crooks? It is Lasso who is the crook but the Assembly refused to acknowledge this and he remains in office.”
Cabezas says UNES believes the tax law is unconstitutional and will challenge it in court. “We felt the Assembly was not the proper venue for debate since the law contains legal violations that should be answered by the judges of the Constitutional Court.”
The ID and Pachakutik blocs claim the threshold for additional taxes should be $2,500 or $3,000, claiming the $2,000 level punishes poor and middle class families. In addition, they say the tax on corporations should be higher.