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Gringo Bitch Box: Tax stuff (VAT, property, cap gains), Tranvía deadline, and a great cause for coastal children

When I worked on the staff of my university daily — ah, those many years ago — I was editor of a feature called the “Bitch Box.”

There was an actual box in the newspaper office where students could drop their hand-written (how quaint) complaints about anything that bothered them. I would compile them, respond to a few, and publish the results twice a week.

Anyway, I’ve decided we need a Gringo Bitch Box, since bitchin’ seems to be a favorite pastime among many of us (I admit I do my share).

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Well lately, I’m hearing lots of bitchin’ about taxes and I thought I’d look into them and set the record straight where I can.

One complaint is about Ecuador’s VAT tax, which is officially 12% but has been jacked up for a one-year period (we’ll see about that) to 14% to help with earthquake reconstruction. Anyway, lots of expats bitch that it’s outrageously high, comparing it to state sales tax back in the U.S.

Well, it turns out we get off light in Ecuador. We pay well below the Latin American average — even at 14%. Our neighbors in Peru and Colombia pay 18% and 19%. It’s 21% in Argentina, 17% in Brazil, and 16% in Mexico.

Broadening the comparison, VATs average a little more than 20% among European Union (EU) countries.

And forget the comparison to U.S. sales taxes. For one thing, they’re collected by the state, not the feds and … the U.S. income tax rate is higher than that of any Latin American country, and is way more than Ecuador’s.

How about property taxes? The average annual property tax in Ecuador for residential and small farm property is $124. In the U.S., it’s $3,150. In the EU, it’s $4,800. Ecuador ranks fouth lowest in Latin America and the Caribbean in property tax rates.

And, by the way, don’t worry too much about the proposed capital gains tax increase (75% on “extraordinary” gains), according to my Ecuadorian neo-con friend. He says that even if it passes, it will either be repealed or ignored by the next government. He says it’s a Correa thing and Correa is gone in May.

‘Nuf said. Stop your bitchin’ (about taxes, anyway). (Info courtesy of the EU office of economic statistics)

* * * *

Another big bitch, of course, is the tranvía, and one popular line of thought among expats is that it will never be finished. Or, that it will be finished in 2050, or on some other distant date when most of us have passed the veil.

I’m here to tell you that there is, indeed, a deadline, and it’s all about politics (surprise, surprise). No, I don’t think the train will be running in October, the latest official deadline. In fact, I don’t think it will be running any time in 2017 or even early 2018. I do, however, think it will be choo-chooing down the track by mid-2018.

Why? The mayor’s up for reelection the following February.

* * * *

Speaking of bitchin’, did you read Susan March’s column about how bad it is for your health to sit on your behiney all day in front of a monitor bitchin’ on social media? She says that it’s much healthier to stand at your monitor while you bitch.

* * * *

Finally, and certainly not speaking of bitchin’, did you read Dr. Rut Román appeal yesterday to fund a book mobile for kids in the coastal earthquake zone? Many of us have donated to the material needs of earthquake victims and these are absolutely vital. On the other hand, as Rut points out, there is also a great need for resources that nourish the mind and spirit of the children who have been so terribly affected by the disaster. They need resources that fire the imagination. Please read Rut’s excellent article and help if you can.

* * * *

Oh, and finally, finally, and speaking of bitchin’ again, does anyone out there know the university where I was the Bitch Box editor? Hint: Newsweek magazine called it the “Berkeley of the South” in 1971.

_________________

Please send tips, rumors, Bitch Box bitches, and alt news concerning expats and Ecuadorians, no matter how outrageous, to Alice at editor@cuencahighlife.com, “attn: Alice.” She will look into them, attempt to verify, and report items that are newsworthy or have entertainment value.

29 thoughts on “Gringo Bitch Box: Tax stuff (VAT, property, cap gains), Tranvía deadline, and a great cause for coastal children

    1. Athens is close –and close to my heart, too. Another hint: it’s where a couple of bored fraternity boys (bored maybe because the football team had just gone 0-11) ran naked through campus and started the college streaking fad.

  1. I thought Berkeley was the Duke of the West. As for Tranvia, I agree. Cabrera never wanted it and in fact, ran on a platform of stopping it, which was, of course, impossible. He then changed this to, well, let’s slow it down and re-study everything. He obviously has no commitment to the project which is reflected in the problems encountered. Construction delays are to be expected in project of this size, but what has happened here is unconscionable.

  2. My complaint about the IVA tax, is not its amount; rather about the refund we “tercer edads” are supposed to be able to receive. My last submission to SRI covered a three-month span of purchases totaling $82.05 in VAT paid and was submitted on the 25th of November. I was just told this week that the SRI has no funds available for the promised reimbursements! For someone living on US Social Security and a small state pension, that refund can make a big difference.

    1. We recently rode with a driver who wanted to charge us double the usual cost of that trip. When I said that was not right, he responded, “My car cost me $25,000! You get $5,000/mo. Social Security and should help pay for it!”
      I explained we worked hard and sacrificed for 50 years in order to come to Ec. Our SS is about half the average SS. “You went to the US, made good wages you said, to pay for your car. We do not have a car,” I explained.
      Further, “We already paid taxes to help cover much of what you got there ‘from the government’ [the government pays nothing – tax payers do]. What we have or don’t have has nothing to do with what we should pay for taxi fare, a loaf of bread at Super Maxi, or anything else,” I responded.

  3. What’s the difference who collects the VAT tax, whether federal or state? It’s figured on sales. And our state had zero sales tax. And far more property tax than here for sure.

    1. The point is that VATs are national taxes that offset (maybe) the national income tax. In Ecuador, the VAT is the main source of revenue whereas in the U.S. income tax is. If you add up state sales tax, state income tax (where they have it), and national income tax, you’ll pay a lot more in the U.S., no matter where you live, than in Ecuador. And then there’s the various real estate taxes…

      1. In our state I paid no state income tax as a veteran, there is no sales tax; we had farm tax deferral still high compared with property taxes here. So overall, it was a good deal.

  4. son of a bitch, good article,,,,, amazing how some of these expats focus only on $$$ but do not really put things into perspective. moving to EC JUST to save money is a bitch

  5. No. “Berkeley of the South” refers to FSU (Florida State University) in Tallahassee . . .and it’s a reference to its similar high level of student activism during the Vietnam Era. It’s not a reference to academic excellence. It’s a reference to student bitchin’ . . . appropriate given the nature of the rest of the article.

    Interestingly and on a separate note, I don’t have a single Cuencano friend in Cuenca who believes that the Transvia will ever be completed. Veremos . . .

  6. Tranvia is going to put Cuenca on the Map in 2018.
    Most modern light rail system in all of the Americas and the first Catenary Free (No overhead wires in the central historic district)
    Loads at street height. Not even one step up.
    Quiet – – and no exhaust pipe!
    Services the Industrial park, both main bus stations, the Airport, the Largest Mercado in southern Ecuador – Feria Libre – & another big Mercado 9 de Octubre plus El Centro & Avenida de las Americas.
    So Quit yer Bitchin’ ! ! 🙂

    1. LadyLee told me I’d have to ride backwards but I could never get a seat. Of course she told me the train would be empty, thus could never sustain itself. The funny part is she can’t see the contradiction in those two ideas.

    2. At the first, I was a big Tranvia fan, being very familiar with its manufacturer and their many installations in Europe. However, over the years, I have grown to have better handle on Cuencanons, what they can do and what they can’t.

      I am now very skeptical that Cuenca possesses the technical culture sufficient to make a Tranvia work or work reliably. Indeed, the design changes necessary to adapt the system to the Cuencanon reality has already deeply prejudiced its effectiveness assuming it ever opens. (I do not say this to demean Cuenca. There are different and greater frustrations in the technically proficient world.)

      I shall be happy merely to see the city return to the state it was before the Tranvia construction began. When asked, I tell my visitors that the unending construction is an hallowed archaeological dig with an indefinite end date. They become hushed in awe.

    3. Medellin has a real metro system. Cuenca has zip and it will be nothing more than a tourist gimmick if it ever gets finished.

  7. The tax information is so useful. Thanks, Alice. Liked the bithin’ part too. I hope you continue writing in Gringo Post for a long, long time!

  8. The tram…..well it might just get completed some day, some month
    or some year. If oil were still selling at $100 per barrel…the tram would have been completed “on time”…..whatever that means in Latinamerica.

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