VAT tax and income tax will increase to help with earthquake recovery; government also considering selling assets and floating bonds

Apr 21, 2016 | 13 comments

President Rafael Correa announced on Wednesday that the national VAT on goods and services will increase from 12% to 14% for a period of one year to help cover the cost of earthquake recovery.

A collapsed hotel in Pedernales.

A collapsed hotel in Pedernales.

The president also announced a one-time 3% surtax on profits and income for Ecuadorian tax payers and a one-time 0.9% tax on wealthier Ecuadorians.

Among other measures being considered to help cover earthquake costs are the sale of government-owned assets and international bond issues.

“Everything is on the table at this time,” Correa said. “We must take these temporary measures due to the great magnitude of this disaster and the expenses of recovering from it. Natural disasters affect all countries, even the richest, and require extraordinary measures.”

As of Wednesday evening, the death toll from Saturday’s earthquake had risen to 570 with more than 4,000 reported injured. An undetermined number are missing.

Rescue workers continue to comb through debris looking for survivors, but few were found on Wednesday. “Sadly, we are moving into a period when our work is the recovery of bodies and this could continue for weeks,” said Manibi Province risk management officer Paúl Estero.

A new concern is the the fact that aftershocks are getting stronger, not weaker. Two of them, measuring above 6.0, shook the north coast on Wednesday. More than 600 aftershocks have followed the 7.8 earthquake.

Correa expressed gratitude to the people of Ecuador as well as to foreign governments for their generosity following the earthquake.

“The response has been overwhelming,” he said. “I am proud of our people and the spirit they are showing to help their countrymen. The response to the disaster has been very impressive. I also want to thank other countries for their contributions to this effort. We know that we have good friends.”

 

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