WITH the time of ten minutes marked on the stopwatch for the Presidency and the Ministry of Finance to explain the details of the decree on the law to strengthen the family economy, and to present arguments for and against in three minutes amicus curiae, The debate on this regulation took place for almost two hours, electronically.

Doubts expressed by the judges related to the urgency of the law and the deadlines for the entry into force of the proposed reforms, as well as the form of compensation for the reduction of income tax in relation to the entry into force of other taxes. . Doubts also arose as to why an attempt was made to determine the secrecy of tax data.

While the representatives of the Presidency –Jorge Benavidez and Yolanda Salgado Guerrón- and the chief state prosecutor, Rafaella Uzcátegui, expressed their position in the sense that the determination of economic urgency is exclusively within the competence of the President of the Republic, the Minister of Economy and Finance, Pablo Arosemena Marriott, explained that “there is nothing more urgent than lowering taxes to restart the economy”, that in the current global circumstances of economic slowdown it is convenient to take these measures to lower taxes, and he commented that during his administration several taxes were lowered and that this resulted in better collection.

This morning, a hearing was held, convened by the Constitutional Court, to deal with the Decree on strengthening family finances. Taken from DC

In the meantime, Ricardo Flores Gallardo, SRI’s Deputy Director of Tax Compliance, referred in his speech to the questions that raised doubts among the judges. He explained to them that the urgency, whose determination rests exclusively with the executive power, is given on the basis of the election calendar determined by the State Electoral Council (CNE). This is because the new convocation of the Assembly and the new president will be sworn in at the end of November. Therefore, it is impossible for this tax reform or the new Parliament to deal with it this year.

In this sense, failure to pass the law on the regulation at this time would bring several inconveniences.

For example, in a relationship Rimpe’s table – which is due to come into force in 2024 according to the Constitutional Court’s own ruling – if it is not approved now, it would not give the next government time to put it into effect. This would mean that next year they would not have a table to pay taxes, which would cause a serious problem for the state treasury.

Even sports forecast taxes which require preparation of forms and systems could not be collected from 2024, should be immediately ready for implementation from February 2024. Meanwhile, VAT on public events would come into force next month after approval.

As for the confidentiality of tax data, Flores explained to the judges that this was already stated in Article 101 of the Law on the Internal Tax Regime, but since the Court declared the unconstitutionality of that norm, which is considered organic, its content should have been transferred to Article 99 of the Tax Law . This is because according to the Organic Law on Transparency and Access to Information (Lotaip), the subject of confidentiality of information must be indicated in the organic law. With this, Ecuador fulfills its obligations to participate in the Global Forum, which in turn allows it to be the beneficiary of tax information from Ecuadorians in various countries.

Flores commented that there is an urgent need to make this change, as the Global Forum reviews countries’ adherence to the agreement every year. Failure to do so would mean losing the advantage of international information that has already given good results in the fight against tax evasion.

On how to compensate for the lower taxes from the decree law, Flores explained that the solution must be seen in a comprehensive way. The regulation itself was offset by higher tax revenues due to the introduction of a sports forecast tax, a 12% increase in public broadcasting and the extension of Rimpe. However, more will be collected from indirect taxes such as VAT, because there will be more money for consumption, there will be more purchases. Additionally, he said taxes would not necessarily need to rise at the same rate as the proposed minimum, since there are other ways to fill tax loopholes through tax spending, which would require regulations or executive orders.

Several citizens and lawyers participated in the action amicus curiae. Viviana Isabel Idrobo, representative of different groups of citizens, argued that the Court should strictly control the urgency of this and future regulations. Carlos Heredia Fiallos considers that it is not an urgent law. David Norero, from a sports forecasting company, said the tax decree violates the right to equality, work and employment. Julio Ramon Jarrin asked to clarify that although VAT has been increased to 12% for public performances, this measure does not affect artistic and cultural performances.

At the end of the hearing, 48 hours were given for the Presidency and the State Attorney’s Office to legalize the interventions. It is not specified when the Court will issue a final verdict.