The government is preparing an urgent proposal for an economic law that analyzes the possibilities of tax relief.

No further details are yet known, but it was the government minister, Henry Cucalón, who announced that the announcement of the said project would be made in the coming days, mentioning that the regime is waiting for the resolution of the National Assembly, amid the tentative policy that is currently being processed.

Fiscal security and tax stability are left to the Constitutional Court with its decision to repeal the law

In an interview with TC television, This Wednesday, May 3, Cucalón was asked about a possible reduction in income tax, and the minister said that they consider relief in this regard to be appropriate. He hinted at it a day after he announced that it would be an urgent project in economic matters and that he would give the details together with the Minister of Economy, Pablo Arosemen. In this regard, the state department announced that when something official is received, it will be announced.

The Tax Administration (SRI) has learned that director Francisco Briones, together with president Guillermo Lasso, has been evaluating options that would ease the tax burden on families without complicating public finances. And for this, a technical scheme for strengthening the family economy is being prepared and defined. Details are pending.

On November 29, 2021, after the COVID-19 pandemic, the Organic Law for Economic Development and Fiscal Sustainability entered into force. This included a tax reform that applied higher taxes to the wealthiest sections of society. Thus, companies with assets of more than $5 million and individuals with assets of more than $1 million and civil partnerships with more than $2 million had to make a temporary contribution to contribute to the tax coffers.

Tax reform gives Ecuador good results for temporary contributions: $392 million collected in one month

The law included a component of higher taxes for the middle class sector earning more than $2,000 a month. Until 2023, those earning less than $1,750 have zero income tax payable and no role discount, according to SRI; from there, the tax rises as income rises.

On the other hand, the law also provided for the reduction of value added tax (VAT) and special consumption tax (ICE) on various products.

The goal of this tax reform was to provide a permanent revenue of 1.9 billion dollars in three years. In 2022 alone, the state treasury is expected to receive around 800 million dollars.

In 2022 tax collection it grew 23% and reached 17,164 million dollars, and this growth – according to the analysis carried out by SRI at the time – corresponded to 17% due to the reactivation of the economy, because sales that year were a record, and 6% due to the law.

That reform did not find support in the Assembly, but this function did not approve, modify or reject the bill within the 30-day period provided for when there are urgent economic matters, and thus the original Government proposal came into force.

Pro-government representative Nathalie Arias recalled that this law was discussed in the Commission for Economic Development and that there was more room for discussion and improvement. “It’s always been said that the first version of the bill that was sent out unfortunately had some flaws and that’s part of what’s being corrected right now.”

“Now that healthier public finances can be achieved, it is time for the executive power, as it has announced, to send the law to the Assembly so that it can be debated,” said a representative from the CREO movement to various media following the assembly.

If you want a reduction in income tax, you must submit a Personal Expenses Projection form in January

A year after the law entered into force, the Assembly approved the project for its repeal, but the executive power vetoed it, and the Constitutional Court declared that complete veto permissible and declared the law on repealing the legislation unconstitutional.

Better tax collection