The tax reform that the Government wants to implement, after the Constitutional Court’s ruling, implies that workers will immediately pay less tax on the income that is deducted from their monthly salary.

And these taxpayers are already doing the math: María de los Ángeles paid $1,712 in income taxes in 2022 with a reduction of $534 and tax calculator which allowed her the Internal Revenue Service (SRI) shows her that with the reform she would no longer have to pay anything in 2023 because she has three dependents and this allows her to reduce up to $1,927.

Income tax: now the reduction will depend on how many family obligations the taxpayer has, not on salary

From January to May, they deducted between 100 and 135 dollars for that tax, and he hopes that, if the Constitutional Court confirms the decree-law, they will no longer deduct from his account and ask DRI to refund what he has paid so far.

Reviewing his SRI statements, he realizes that since 2014 he has been paying $200 to $500 in annual income tax, and in 2022 it has jumped to $1,712. And he says that his colleagues are also calculating how much he will be able to recover; For example, the monthly discount for one of them is $200 and even though he has only one family burden, the new mechanism also benefits him, because the tax payment from $2,185 would go to $1,324, of which they deducted $1,000 until May. he expects June to be the last month in which he will drop $200, and in the following months he will pay about $20.

The positions for, against and new attachments that arrived at the Constitutional Court with the Decree on the Tax Law show the polarity in the country

The government’s plan is that this reform can be applied in July, given that the Constitutional Court has called the hearing for this Tuesday, June 6. “If this is approved, in July of this year, citizens will be able to obtain a lower withholding tax and will immediately increase their net salary,” Economy Minister Pablo Arosemena said in an interview with this newspaper.

And he explained that someone who works in dependency and earns $2,400 currently pays $1,000 in income taxes. “With this reform, if you have two burdens, you will pay zero. Someone who earns less than 1,900 dollars currently pays 237 dollars, and with the reform – regardless of whether they have dependent family members or not – they would not pay zero”.

For this reason, the executive power claims that it is necessary to inject money as soon as possible to families, and thus to the national economy.

These are the reasons that Guillermo Lasso presented to the Constitutional Court to urgently consider the decree law that reduces taxes

The director of the SRI, Francisco Briones, adheres to this criterion: when the salary is paid and the taxpayer receives his list of payments, he sees the discount for income tax, there are those who are deducted 50, 100, 200 and 500 dollars “and that’s urgency, to achieve this immediately, and by reducing the income tax there is also a direct relief of the family budget”, he commented this Monday, June 5, in a radio interview.

From this tax, the state will stop receiving almost 200 million dollars, which will remain in the family budget.

There are also changes on the side of micro-entrepreneurs. Under current law, if you sell $0 or up to $20,000, you pay $60, but with the reform, if you make $0 to $2,500, you pay zero. “This is how we introduce the concept of progressiveness that the Court itself indicated,” said Minister Arosemena.