The economic and legal decrees announced by the Government should not be ‘flammable’, there are observations about how appropriate they would be legally

Observations in the legal field and on adequacy whether decrees send laws, in this time of political crisis, were brought by labor law experts and trade union representatives, on the occasion of the Government’s announcement that they will try to send five proposals in the economic field.

is that On May 17, after the announcement of the death cross, the President of the Republic, Guillermo Lasso, indicated that he had already sent the first legal decree that must be approved by the Constitutional Court and which includes the so-called tax reform Organic law for strengthening the family economy that it was sent to the National Assembly on May 11 and that it has not been dealt with. This is intended to give citizens more room for income tax deductions, which would allow them to have about $200 million more in the taxpayers’ pockets. This, in relation to the family obligations of citizens.

Additionally, The Minister of Labor, Patricio Donoso, assured on the same day that “the president is determined to approve, through what the Constitution gives him, laws that have not been dealt with by the Assembly.” Among them, he mentioned labor reform. He even said that on September 24, 2021, a draft was sent that included labor reform that was not even approved by the Legislative Administrative Council (CAL).

In the meantime, Energy Minister Fernando Santos also announced that he will try to speed up certain processes in the field of energy, telecommunications and public works. According to the official, the platform for which President Lasso was elected had to do with greater participation of the private sector in these areas, while the state must devote itself to its “noble goals”. He explained that all proposed regulations will be submitted to the Constitutional Court for consideration.

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As for Donos’ announcement, there were demands for prudence from the manufacturing and legal sectors.

For Vanessa Velásquez, the manager of Laborlex, what the Minister of Labor said is a hasty announcement and believes that it is not sustainable to implement labor reform through a law on decrees: Article 148 of the Constitution indicates that the president can issue laws on decrees, but in urgent economic matters, and labor reform would not have such a character. He explained that in this article the promotion of full employment and the valuation of all forms of work is considered part of economic policy, as well as the creation of economic stability, understood as the maximum level of sustainable production and employment over time. Still the same Article 148 states that the newly elected assembly can approve or repeal decree laws. In this sense, he wonders if it is worthwhile to make a reform, so that it lasts for several months and then is eliminated.

That is why he calls for caution with advertisements, especially in such a difficult political moment. “This is a moment of political prudence to maintain order regarding the legal issue. Although there is a desire to increase employment through labor reform, we cannot offer what has constitutional limitations”. For Velásquez, pressing economic issues can be related to taxes, fiscal issues, oil, mining, electricity, among others.

In the face of death on the cross, the business sector asks political and social groups to maintain constitutional order and the normal functioning of economic activity

The The President of the Board of Directors of the Quito Chamber of Commerce, Mónica Heller, calls for great caution and intelligence in these moments of great sensitivity. He believes that the current announcements may not yield the expected results.

The country, he says, needs labor reform, which makes the law more flexible for employment, through more modern contracts, in line with today’s times. AND Talking about flexibility does not mean talking about insecurity. However, he admits that the current situation is very bad. It should be a good suggestion, but not inflammatory. “It must be an intelligent, measured reform.”

As for decrees of a tax nature There are also observations. John Arias, Partner and Managing Director of Census Consultores, explains that the mentioned proposal regarding the income tax will have “immediate” effects, from the application corresponding to the year 2023.

These are the tax changes that will occur with the first decree of law issued after the death of the cross

So, in the first general provision, it was established that: “The only time the provisions of this law relating to the reduction of income tax for personal expenses and the personal income tax table will apply to the abolition of income tax for the fiscal year 2023. because they do not harm taxpayers.”

This means that the reform introduced by the Organic Law for Economic Development and Fiscal Sustainability from November 2021, whose last declarations were finalized only last April, would be ineffective. In that sense, Arias says that this change could affect the principle of non-retroactivity provided for in the Constitution and in the Tax Code. “Ecuadorian regulations stipulate that all tax reforms must be applied in the future,” he says. He also believes that “the reform will modify the deduction of personal expenses and the income tax rate, taking into account everything achieved during 2023. Therefore, the projection of the expenses of natural persons must be modified immediately”.

For Arias, there is a regulatory conflict at this point since Article 300 of the Constitution provides that the tax regime will be governed by, among other principles, the prohibition of retroactivity. “In this sense, it is against the constitutional principle to adopt a tax law in the middle of the current year, which changes the previous projection of expenditures and their presentation.” The draft law, he adds, makes a mistake because it points out that since it does not cause alleged damage to taxpayers, it can be applied immediately. This cause of retroactivity was provided for in the 1998 Constitution, which has now been repealed. The executive power accepted an outdated criterion that cannot be applied today”.

The president of the Confederation of Indigenous Nationalities of Ecuador (Conaie), Leonidas Iza, warned that one of the purposes of crucifixion establish “harmful laws”. Therefore, he called for the establishment of permanent assemblies that will monitor the intentions of approving, among other things, economic reforms, privatization of strategic sectors, and labor reform. “Unconstitutional and illegitimate measures that will affect the Ecuadorian people and that will have as a response our rejection from the streets”, warned.