The file in the first discussion of the urgent economic project proposing to increase the value added tax (VAT) to 15 percent is a scenario analyzed by the legislators of the Civil Revolution (RC), the Social Christian Party (PSC), the Pachakutik movement and even the Build movement which does not turns off.

The President of the Republic, Daniel Noboa Azín, at midnight on January 11, 2024, sent to the National Assembly a draft of the Organic Law on confronting internal armed conflicts, social and economic crisis, in which it proposes to increase the value added tax (VAT) from 12% to 15% in order to finance and expenses arising from the fight against organized crime and trafficking drugs such as the fiscal crisis.

Two weeks have passed since that day for the Commission for Economic Development to submit its report to the first hearing, and the Government failed to convince that an increase of 3 tax points should be approved.

The legislative blocs RC, PSC, Pachakutik and some Construye believe that this tax is regressive, that it would cause economic contraction and that it would affect all Ecuadorians. For this group of legislators, the thesis presented by the president of the Development Table Valentina Centeno (ADN) about the regime’s flexibility regarding the temporality of the measure and the approach to directing subsidies is not convincing.

Centeno asked the blocs not to lie about the Government’s approach, because with the increase in VAT by 3 points, “the poorest families will not be affected; “The state must fight against narco-terrorism and violence.”

Political sectors that oppose the VAT increase warn that the Government wants to gain time and prolong the processing of its proposal in the first debate and allow the project to enter into force by force of law.

For the avoidance of doubt, this January 24, legislators Vicente Taiano (PSC), Gisella Garzón (RC), Mariana Yumbay (Pachakutik) and Juan Carlos Camacho (Construye) talked about the option of pushing the resolution in the first debate and delaying the project. This possibility is considered in the last paragraph of Article 60 of the Organic Law on Legislative Function, where it is expressly stated that “the plenary session, by an absolute majority of its members, can decide to submit a bill.” The file ends the processing of the proposal of the executive power in the National Assembly and it cannot be discussed again.

PSC bench coordinator, Vicente Taiano, He said that three draft reports will be presented at the Development Committee, on which the members of the assembly will have to express their opinions, and as a result, the Executive Project will be presented at the plenary session of the Assembly, where there are two possibilities: first, that it can be ordered to wait and prepare the table document for second discussion based on what was agreed at the plenary session; and the second option is to archive the project in the first discussion through a resolution.

The Social-Christian representative explained that only a proposal with 70 votes of support is needed to archive the project of the executive branch, and the PSC is currently waiting for the result of the economic development table, where it will check whether the proposal of that political shop is accepted or not., such as the revision of subsidies for fuel, the rapid sale of non-productive assets in the hands of the state and the reduction of the size of the state. They will not accept a report that includes an increase in VAT, not even a point or a temporary measure.

The application of the project in the first discussion is a scenario that is in the law and will always have to adhere to the scenarios that allow to act within the framework of the law, but also must try to get funds to finance the internal conflict.

Legislator Gisella Garzón, from the Civil Revolution, He commented that they hope that the legal deadlines will be respected and the parliamentary procedures operationalized; That is, the report of the majority is voted on, and the report of the minority is channeled.

RC’s concern is that they are trying to postpone the issue of the Commission for Economic Development and that nothing reaches the plenary session of the Assembly; and if it is decided to extend the time, the plenary session could decide on archiving, and this will depend on the votes of the council benches.

Mariana Yumbay, representative of Pachakutik in the National Assemblyhe pointed out that they hope that the project will reach the plenary session, and we hope that it will be next week, when it will be possible to discuss and submit a proposal to increase the VAT to 15%.

Yumbay maintains that the intention is evident that the urgent project suffers delays in processing, unlike the previous two urgent economic projects that were processed in record time. “So this project is dragging on, taking more time, and obviously they know they don’t have enough votes and are looking for another strategy to get it by force of law, and that would be irresponsible,” he said. .

The Pachakutik lawmaker indicated that the file in the first debate could be the way forward against the intention to enter the project without taking into account the alternatives announced by the National Assembly.

Legislator of the Construye movement Juan Carlos Camacho He hopes that the project will be discussed at the plenary session, but he believes that the pact between the Government, the Republic of Croatia and the PSC is to play so that the Government’s proposal enters into force by force of law.

Camacho said that his political organization is still waiting to find out the Government’s economic plan and to explain how they will spend the funds they want to collect by increasing the VAT.

The representative of Construye stated that the country needs resources, but not in the form proposed by the Government, but that alternatives such as fuel targeting are applied, and the option to archive the project will come when the Executive insists on it. an increase of 3 VAT points.