Ecuador: Lasso signs decree law of the new tax reform after dissolving Parliament

The new tax reform was the first decree law signed by the president of Ecuador, William Lassoafter dissolving the National Assembly (Parliament), with an opposition majority, and bringing forward the general elections.

In this way, this document, which extends the ceiling of tax exemptions depending on the number of members of each family, becomes the first to appear during this extraordinary period in which he will be able to govern by decree until his successor takes office.

The new tax reform, which partially modifies the one applied by Lasso shortly after coming to power, had been presented last week at the Carondelet Palace, the seat of the Executive Power. Under a principle of progressivity, The decree contemplates an increase in annual deductible expenses, which may be up to US$15,294, depending on the number of family members.

According to the Ministry of Economy and Finance, in Ecuador There are 341,000 taxpayers who pay income tax and the tax reform will directly benefit 99.8%. In other words, 340,318 who will each have an average saving of US$558 in said disbursement.

Likewise, the new tax reform creates a 15% income tax rate for sports betting houses.

In statements to journalists, the Minister of Economy and Finance, Pablo Arosemena, explained that the decree law has already been sent to the Constitutional Court for its corresponding review and validation.

“It replicates the bill that had been sent to the National Assembly last week,” Arosemena said, recalling that the text has a “special sensitivity for families that have multiple family responsibilities or rare and catastrophic diseases.”. “We are going to continue in the line of putting money in the pockets of Ecuadorian families, especially in the middle class and micro-entrepreneurs”he added.

Arosemena wished that the decree law could have the validation of the highest court of guarantees as soon as possible and anticipated that there are more regulations that will be issued in this period, all under the common thread of benefiting Ecuadorian families.

The first tax reform issued by Lasso in December 2022 was later denied by the National Assembly, which voted for its repeal, but the president maintained the rule by comprehensively vetoing the provision of the Legislature.

What happened in Ecuador?

Lasso resorted to the “death cross” in the middle of the censorship impeachment trial that the opposition launched against the head of state, whom it accuses of an alleged crime of embezzlement (embezzlement) for alleged conditions detrimental to the State in maritime oil transport contracts.

The president opted for this figure contemplated in the Ecuadorian Constitution of 2008 due to the uncertainty of not having enough votes to save the motion of no confidence in the chamber.

The opposition launched the impeachment trial at Lasso’s weakest moment in his almost two-year presidential term, after the heavy defeat suffered in the February 5 electionwhen the Government lost the referendum proposed to apply reforms to the Constitution and, at the same time, correísmo was the great winner of the local elections.