If you earn more, you pay more, to help with earthquake reconstruction

May 4, 2016 | 4 comments

Among the provisions of earthquake reconstruction legislation being debated by the National Assembly is one that will tax those who earn more than $1,000 a month.

National Assembly leaders yesterday in Quito. (El Comercio)

National Assembly leaders yesterday in Quito. (El Comercio)

The Law of Solidarity — full name, Ley Solidaria y de Corresponsabilidad Ciudadana por las Afectaciones del Terremoto — was sent to the Assembly two weeks ago by President Rafael Correa following the April 16 coastal earthquake.

According to the bill’s language, the tax on income will be based on a sliding scale depending on monthly income. Those earning $1,000 a month will be required to contribute one day’s income. Those earning $5,000 will contribute five days over a five-month period, and those earning $20,000 a month or more will contribute eight days over eight months.

According to the research of AMS Andean Ecuador, the employees who will pay the most work in the banking and finance, communications, technology, and manufacturing sectors. The research showed that 32% of workers in those industries earn more than $1,000 a month.

Eduardo Mora, who represents more than 3,500 telecom workers says his members understand that they will need to pay more. “Rebuilding after the earthquake is everyone’s responsibility and it is fair that those who have higher incomes pay more,” he said.

Another provisions of the earthquake relief legislation will increase the IVA tax from 12% to 14% for a period of one year.

The proposed legislation had its first debate on Monday and, according to the request form Correa, should receive a final vote within 30 days.

 

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