They demand unconstitutionality of the tax reform for eliminating tax exemptions in border cantons

Assemblyman Ramiro Narváez of the Democratic Left, this February 9, presented before the Constitutional Court an action of unconstitutionality to several articles of the Law of Economic Development and Fiscal Sustainability after the COVID-19 pandemic, because it eliminates tax exemptions and deductions to rent in favor of the border cantons.

The unconstitutionality action is to articles 33, 39 numeral 3, 117 and 119 of the Organic Law of Economic Development and Fiscal Sustainability after the COVID-19 Pandemic. According to the Carchi representative, this law, in addition to hitting public and private workers, also hits micro-entrepreneurs in the border territories.

This is the third action of unconstitutionality that is presented in the Constitutional Court due to the validity of that norm that entered into force on November 29, 2021, by decree-law signed by the President of the Republic, Guillermo Lasso.

Constitutional Court admits for processing the claim of unconstitutionality to the tax reform

The current tax reform repealed various tax benefits such as income tax exemptions and deductions in favor of the border cantons contained in the Organic Law of Internal Tax Regime as well as in the Organic Law for Productive Development, Investment Attraction, Generation of Job; and, Stability and Fiscal Balance, explained the plaintiff.

In the opinion of Assemblyman Narváez, articles 33, 39 numeral 3, 117 and 119 of the Law are unconstitutional because the Constitution in article 11 numeral 8 states that any action or omission of a regressive nature that unjustifiably diminishes, impairs or nullifies will be unconstitutional the exercise of rights.

That those rights and tax benefits are subject to the cantons whose territories are totally or partially within a border strip of forty kilometers; In addition, article 249 of the Constitution is clear in stating that they will receive preferential attention to strengthen a culture of peace and socioeconomic development through comprehensive policies that protect sovereignty, natural biodiversity and interculturality.

In the claim of unconstitutionality, the legislator of the Democratic Left, requested the provisional suspension of the contested articles since the repeal of tax benefits affects investments at a time when the country and the border cantons are going through an economic crisis consequence of the COVID-19 pandemic.

Narváez commented that the lack of investment does not allow liquidity to be injected into the local economy, the lack of liquidity does not allow the demand for goods and services to increase, the lack of demand does not stimulate the local market, the lack of dynamism of the local market does not help the economic reactivation and the lack of economic reactivation does not allow to generate work. (I)