The ISD so far this year has represented $ 1,095 million, so it is calculated that the impact of the tax for the treasury would be $ 200 million.
The announcement of the President of the Republic, Guillermo Lasso, that in 2022 it will be reduced 1 point of the ISD (which is now at 5%), at a rate of 0.25 per quarter, generated approval reactions among businessmen and economic analysts. Although the measure will generate a fiscal impact of about $ 200 million in the year, all agree that this will generate greater economic reactivation, both in consumption and investment. In this way, the president also seeks to consolidate the idea that he will fulfill his campaign promises, as he did a few days ago with the salary issue, experts say.
Lasso said on December 21 that a one-shot reduction cannot be made so as not to throw public finances out of balance. However, it will be done progressively; For example, since January only 4.75% will be paid, in the second quarter the rate will be at 4.50%, in the third quarter at 4.25% and in the fourth quarter it will be at 4%.
According to the data from the Internal Revenue Service (SRI), it collected between January and November 2021 $ 1,095 million per ISD. A figure higher than that collected in the entire year 2020, due to a pandemic: $ 964 million. In 2019, ISD’s revenue was $ 1,271 million.
Pablo Zambrano Albuja, executive president of the Chamber of Industries and Production, considered that the gradual reduction of the ISD has been a constant request from the private sector. “That is why we very well received the announcement of the President of the Republic.”
According to Zambrano, “this will allow companies to redirect and reinvest resources to increase their production and generate more jobs.” This measure contributes to attracting investment and must be accompanied by a competitiveness agenda. He also said that they hope that it will be completely eliminated in two or three years maximum.
In accordance with Alberto Acosta Burneo, editor of Weekly Analysis, the reduction of the ISD brings benefits because it implies cost savings in the productive sector. He explained that although capital goods and raw materials are now exempt, there are a series of products that in general are not considered capital goods or raw materials, although for a sector they are. This measure cuts costs and gives a break to the pocket in an extended way, he added.
For Acosta, the measure somewhat compensates for what is being withdrawn from liquidity through the tax reform. Regarding the issue of investment and the inflow of capital that are halted, among other issues due to the existence of the tax, he considers that the inflow of flows will not be seen immediately, because it is necessary to eliminate all of it; however, it is read as a step in the right direction, he said.
Another issue that should be highlighted about the announcement is that the Government is reaffirming that it will fulfill its electoral promises, just as it did with the salary issue. He indicated that one of the strong criticisms that was being made is that he won with a liberal economic program, but already in the Government he was applying another more of a social democratic style.
Meanwhile, Roberto Apunte, member of the UISEK Business School, lowering taxes always means a stimulus for the economy. When making an announcement about the ISD, even if it is a low percentage, there is a lower cost implication that motivates more consumption. Further, This can benefit those who have always made imports, as there will be a lower cost. An additional consequence could be increased imports.
However, he is also of the opinion that there may be a stimulus for investors who could make new calculations and see this reduction as positive. In any case, consider that if the announcement had been in the sense that it will continue to reduce in cascade during the following years, it could have been more interesting for investors. In this sense, he said that the president had not completed the announcement, since it is not yet clear if the measure will continue in the following years, and that the fiscal impact that could reach $ 200 million a year is manageable. (I)
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