War costs and costs. President Daniel Noboa said this a few hours before sending to the National Assembly as an urgent economic matter the draft of the Organic Law to oppose the internal armed conflict, social and economic crisis which proposes to raise the value added tax (VAT) rate from 12% to 15%.
These three additional points will mean for the state an increase in collection of 1,306 million dollars per year, according to the projections of the Tax Service (SRI), which prepared a report on the collection effect that was attached to the project sent to the Assembly.
However, “given that the law enters into force on March 1, 2024, the collection would amount to $1.071 million, which is revenue that would contribute to reducing the state budget deficit for the current year.” This is stated in a letter from the Ministry of Economy and Finance, which is part of the documentation submitted to the Legislative Body.
The government announced a few minutes ago that the additional funds will be directed to security and social protection. “This VAT is still one of the lowest in the region.”
This is the tax that generates the most funds for the state. Collection from January to November 2023 was $16,019 million, and of this $7,757 million – equivalent to 48% – corresponds to VAT, followed by income tax with $5,292 million, foreign exchange outflow tax (ISD) with 1,006 million dollars and special consumption tax (ICE) with 766 million dollars, other taxes total 1,197 million dollars.
With the latest statistics from SRI including December, VAT records collections of USD 6,307.3 million from internal operations and USD 2,136.8 million from imports, for a total of USD 8,444 million.
In an interview with FM Mundo on the afternoon of Thursday, January 11, Noboa commented that “we need to take drastic economic measures and we must coordinate because the war costs and costs, so we must take important actions and measures together with the Legislature can also finance this fight against of terrorism.”
And in the night he sent a third emergency bill. The Assembly adopted the previous two: the Law on Economic Efficiency and Employment, which entered into force on December 20, 2023, and the Law on Energy Competitiveness, which was published in the Register on January 11, 2024.
Source: Eluniverso
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
