President Guillermo Lasso has sent to the National Assembly a tax reform bill aimed at reducing the tax burden for those earning between $2,000 and $4,000 a month. It does this as compensation for the November 2021 tax increase, which was solely about increasing the tax burden on these taxpayers and companies. It was businessmen and the upper middle class who were the most ardent advocates of candidate Lasso and his promises to reduce taxes and create a better environment for the private economy.

The project that Lasso sent in 2021 contained a higher tax increase than what the government intended, with the aim of having room for negotiations with the parliamentarians. But the correísmo wisely orchestrated the supposed legislative lapse and the project went through as the president proposed. The purpose was to disappoint the president’s most ardent supporters, and correísmo achieved that goal.

From the legislative benches, they announce support and corrections to the tax reform of the executive branch

The Constitutional Court did not like the abolition of the inheritance tax and threw out that chapter of the reform. It also abolished the simplified income tax system called Rimpe, and the new project includes a new Rimpe scheme.

Today, the government proposes to reduce the tax burden on families by 195 million dollars by slightly reforming the income tax tables and re-introducing deductions from the tax base according to the number of family obligations. This is partially compensated for by reducing benefits for companies, which has not yet been defined.

The Director of SRI explains that artistic and cultural services are not public events

Although there is justice in reducing the tax burden on families, the initiative comes at the right time. One might believe that public finances are good, but the opposite is true. As soon as taxes went up in 2022, the Constitutional Court ordered a steep increase in teachers’ salaries, without funding. Then the Court complicated the issuance of environmental permits, thereby paralyzing at least 100 important investment projects, which slows down the recovery of the economy, the creation of new jobs and the collection of taxes. A fiscal deficit has opened, there is a deterioration compared to 2022. The government will not be able to implement the budget in its entirety and there will be delays.

Fields other than ITT are in decline. This would be the end of the oil age.

Things become even more critical with the Constitutional Court this week giving the go-ahead to a public consultation on oil in Yasuní and announcing that oil activity must cease within a year if it wins. This would lose 55,000 barrels of production per day, oil exports would fall to the same level as hydrocarbon imports, and oil revenue would disappear in smoke.

Fields other than ITT are in decline. This would be the end of the oil age. Mining, which was seen as a potential successor to oil, is developing very slowly despite multiple obstacles set up by the Constitutional Court, most of which show evidence of being prey to a utopian environment.

The state treasury must replace the lost oil revenue by removing fuel subsidies or by brutally increasing taxes. We will feel the decision on Yasuní in our pockets. (OR)