The director of Ecuador’s Internal Revenue Service (SRI), Ximena Amorosos says that amendments to the Production Incentives and Tax Fraud Prevention law will save the country $200 million a year.
According to Amorosos, the savings will come primarily from ending tax exemptions for businesses producing what the government considers unhealthy products, primarily “junk food.” The new rules will also limit senior citizen tax reimbursements.
She said that the purpose of the changes is not only to save the government money but to alter people’s preferences and tastes that lead to the consumptions of harmful products. “Consumers have two motivating factors when they make choices to purchase a product, price and taste,” she said. “If the price is higher, they will be less inclined to buy.” She added that the government is launching a public service campaign to reduce consumption of products it feels are unhealthy.
Amorosos said that tighter restriction of IVA tax reimbursements will also save the country millions. The reimbursements for those over 65 are intended only for essentials, she says, not for “luxuries.” She said that deductions for items such as televisions, jacuzzis and appliances will no longer be allowed.
She said the country will also reduce tax deductions for Ecuadorians living overseas who take advantage of the current tax laws to save money. Deductions for those out of the country for more than 183 consecutive days will not be allowed under new rules, Amorosos said.