ICE for cigarettes, alcohol, beers, sugary drinks and plastic bags rises between $0.01 and $0.48 when applying an annual adjustment. Entrepreneurship criticizes the rise and calls for a review

The Special Consumption Tax (ICE) has taken center stage at the beginning of 2023. Its modification by the Internal Revenue Service (SRI), which established new specific rates indicated in article 82 of the Internal Tax Regime Law, caused the reaction of the business sector.

This, because the SRI issued Resolution NAC-DGERCGC22-00000063 on December 27, which establishes the special ICE rates for six products, which entered into force on January 1, 2023.

This is the list of products, their specific ICE rates and the increase compared to the previous ones:

1. Cigarettes: $0.17 per unit (increment of $0.01 per unit).
2. Alcohol (use other than alcoholic beverages and pharmaceuticals) and alcoholic beverages: $10.36 per liter of pure alcohol (increase of $0.36 per liter of pure alcohol).
3. Industrial beer: $13.56 per liter of pure alcohol (increase of $0.48 per liter of pure alcohol).
4. Craft beer: $1.55 per liter of pure alcohol (increase of $0.05 per liter of pure alcohol).
5. Non-alcoholic and soft drinks with a sugar content greater than 25 grams per liter of drink: $0.19 per 100 grams of added sugar (increase of $0.01 per 100 grams of added sugar).
6. Plastic bags: $0.10 per plastic bag.

In the case of plastic bags, the resolution clarifies that the tax is established in accordance with the Sixth Transitory Provision of the Organic Law of Tax Simplification and Progressivity.

These changes, according to the resolution, were based on the information published by the National Institute of Statistics and Censuses (INEC) on its institutional website, about the annual variation of the Consumer Price Index (General CPI), as of November 2022. , which was (+) 3.64420736328825%.

In Ecuador for this tax, which includes other additional products and services for which the specific rate was increased, from January to July 2021, $482 million were collected, which represented a variation of 2.0% in relation to the same period of 2021. The ICE of internal operations decreased (went from $350 million to $297 million), while that of external operations rose from $122 million to $184 million. In July 2022, $60 million was collected from this tax.

Beer consumption generates high revenue for the treasury by ICE: $124 million was collected in five months this year in Ecuador

Meanwhile, for the business sector, this tax will automatically increase the value of products such as sugary soft drinks, industrial or craft beers, plastic bags and cigarettes; and it will directly affect not only consumers, but also micro-entrepreneurs and owners of neighborhood stores, on which more than 640,000 families depend.

Miguel Ángel González, president of the Ecuadorian Business Committee (CEE), sent a letter to the President of the Republic, Guillermo Lasso, in which they expose the position of the business community and request the revision of the rates and the formulas for their calculation.

“We request an exhaustive review of all the circumstances concerning the special consumption tax, in such a way that the planned formulas are readjusted and unnecessary increases are avoided, or even materializing, in the medium term, the maximum objective, which is the prompt reduction or elimination of the assets encumbered with this tax, thus protecting the fragile economy of Ecuadorians,” González said in the letter sent to the president.

The president of the Committee regretted that during past governments the sale and consumption of certain products was unjustifiably demonized, affecting them with ICE as a disincentive mechanism and applying questionable and fiscal calculation formulas, without considering direct consequences such as smuggling and tax evasion.

González stressed that the fiscal pressure faced by multiple sectors of the economy continues to be an obstacle to achieving the competitiveness of the productive sector.

“Although many of the elements related to these aspects do not depend solely on you and the Executive Power, there are particular cases in which the solution can be developed through presidential decisions. This is the case of the tax on special consumption, which, as in the case of the aforementioned goods, contemplates formulas and calculation bases that would seem to be aimed simply at increasing collection,” González explained to President Lasso. (YO)