Draft Law for Economic Development has a new table to calculate the payment with an additional range and a surplus rate that rises to 37%
The new way of calculating the payment of income tax is better explained in the new urgent project sent by the Executive on the night of Thursday, October 28, to the National Assembly. The additional contributions that must be made month by month who earn more than $ 2,000 are kept progressively, from $ 15 and go up to $ 100 for those who earn more than $ 3,400, to $ 200 for those with income over $ 5,000 and up to $ 800 for salaries over $ 9,800. The background change in relation to the first proposal is the table used to make said payment.
In the draft Law for Economic Development and Fiscal Sustainability, as in the original proposal, all the income of the person is taken into account without exceptions and the deductions and their amounts are replaced by a reduction of 20% or 10% for personal expenses.
How will the amount for the rebate be established? The project establishes the rules:
- “If your annual gross income (includes exempt income) does not exceed 2.13 basic fractions deducted from income tax, the maximum amount of the deduction for personal expenses will be the result of applying the following formula: R = L x 20 % “.
- “If your annual gross income (includes exempt income) exceeds 2.13 basic fractions deducted from income tax during the fiscal year: R = L x 10%”.
In this formula R is the deduction for personal expenses. L is the value that is lower between the personal expenses declared for the annual fiscal period and the value of the basic family basket multiplied by seven. The basic tax-deductible fraction proposed for 2022 is $ 11,310.
The basic basket is an indicator that is reported monthly by the National Institute of Statistics and Censuses (INEC) and the December of the fiscal year that is settled will be taken into account. As of last September that basket is located at $ 712.85, that value times seven is around $ 5,000.
In other words, the reduction would be up to $ 1,000 for those with gross income of less than $ 24,090 a year ($ 2,007 a month) and up to $ 500 for those who earn more than that.
What changes is the table to calculate the tax payment. An additional range is now added to the original proposal, thus adding up to ten levels and the highest, for those who receive more than $ 100,000 per year, will have a rate increased to 37% on the excess. Currently the rates range from 5% to 35%.
Until now, this tax had been calculated by discounting from gross income up to $ 14,576 of deductible expenses. This will change when this urgent law is approved, since taxable income is calculated from gross income, based on the table that has a tax for basic fraction and a percentage for the surplus. The reduction will be applied to this new tax value as a tax credit.
With a greater contribution for companies with more than $ 5 million of equity, a new tax proposal reached the Assembly
Personal expenses correspond to those made in the country for rent or interest payments for the acquisition of housing, food, the payment of alimony, clothing, national tourism, health and education, including art and culture. To quantify these expenses, it is possible to consider those made by the parents, spouse or common-law partner and dependent children if they do not receive taxed income.
The additional contributions that people who earn more than $ 2,000 will make would go from $ 15.76 plus the $ 13 that they paid before add up to $ 28.76, according to the virtual calculator that the Communication Secretariat enabled on the website https: / /www.comunicacion.gob.ec/calculadora/ and where the citizen can place his salary in the box to have an estimated idea of the monthly income tax he would pay.
President Guillermo Lasso assures that the majority of the Economically Active Population (EAP) will not pay more taxes, and that the principle of progressivity is met by affecting an increase in the income tax rate of only 3.4% of that group.
And a graph presented next to the bill shows how those who earn the most would pay around $ 100 a month in the case of income over $ 3,200, or $ 200 for those who earn more than $ 5,000, about $ 400 for those of more. of $ 6,200 and thus the contribution increases as the income range rises.
According to the Ministry of Economy and Finance, the original proposal was expected to raise $ 434 million, but with the change, which establishes a higher payment for those who earn the most, it could be increased to $ 460 million or $ 465 million more. This State portfolio indicated that the suggestion that the greater burden be applied to those who earn more than $ 5,000 was accepted. (I)
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