National Assembly approves tax hikes, other measures, to cover budget deficit

Apr 28, 2016 | 0 comments

Ecuador’s National Assembly has passed a tax bill submitted by President Rafael Correa to cover the national budget deficit. The Assembly is also considering a second bill from Correa to cover reconstruction costs from the April 16 earthquake.

President Rafael Correa

President Rafael Correa

The Organic Law on Balancing Public Finances, submitted prior to the earthquake, raises taxes on cigarettes, beer, sugary drinks, and telephone service, and reduces the amount of IVA tax deductions that can be claimed by citizens and residents over the age of 65. The bill also reduces from $11,170 to $1,098 the amount of cash travelers can take out of the country tax-free.

Opponents of the legislation argued that taxes will be counter-productive and put an unfair burden on small businesses that sell beer, soft drinks and cigarettes. Assemblywoman Cynthia Viteri said, “This comes at a terrible time for the 400,000 small stores in the country. They are already hurting because of the bad economy and this simply adds insult to injury.”

The ruling Alianza Pais (AP) party made minor adjustments to the proposed legislation but refused to concede ground on major issues. According to AP’s Carlos Bergman, it would be irresponsible not to raise taxes. “With the reduction in oil revenues and the effect on trade of the strong U.S. dollar, we must act quickly to maintain solvency.”

The government hopes to raise $335 million in 2016 and $492 million in 2017 from the new taxes, according to estimates provided by SRI.

The Assembly takes up Correa’s earthquake relief legislation today which proposes a 2% increase on the national VAT as well as new taxes on income.



Expat Community News

Dani News

Google ad

Fund Grace News

Gypsy News

Veronica Arpi News

The Cuenca Dispatch

Week of February 25

Cuenca Finally Gets to Experience Van Gogh Like Never Before.

Read more

Ecuador lost just over a million hectares of forest formations in 38 years.

Read more

Drone Plants 1,500 Trees in 15 Minutes to Combat Deforestation.

Read more

Google ad


Hogar Esperanza News

Subscribe to our newsletter

Cuenca High Life offers on-line publications, local translated news, and reports about the expat life and living in Ecuador. 

You have Successfully Subscribed!