Last week, President Guillermo Lasso announced several tax measures that will apply from next February 1. One of these is the reduction of the excise tax on various products such as cigarettes, sugary drinks and beer.
The director of the Internal Revenue Service (SRI), Francisco Briones, indicated that in practice this tax is a tariff surcharge that affects all consumer imports of goods consumed in homes.
Tax reduction will take effect from February 1, 2023
Given this, the World Health Organization (WHO) through the Pan American Health Organization (PAHO) in Ecuador ruled for the provisions and noted that the consumption of these products is related to the epidemic of non-communicable diseases such as diseases cardiovascular, overweight, diabetes, cancer and respiratory diseases.
PAHO explained that healthy taxes are levied on products whose consumption constitutes an important risk factor. “Its purpose is to discourage its consumption and reduce affordability to achieve a better state of health for the population, reduce health care costs, increase labor productivity and generate stable tax revenues,” it was specified.
With respect to tobacco, Ecuador has a total tax fraction regarding the retail price of cigarettes that is lower than international recommendations and those in force in other countries in the region and the world. Similarly, the tax rate on sugary drinks is below countries such as Belize, Chile and Peru.
The body recommended the adoption of some measures such as:
- Strengthen tax policies for tobacco products, alcoholic and sugary beverages, under a tax simplicity scheme.
- Apply the annual adjustment for inflation to the ICE.
- Eliminate the current differences in tax treatment between industrial and craft beers and the exception of the application of ICE to sweetened milk.
- Strengthen tobacco product tracking and tracing systems through mechanisms that ensure the non-conflict of interest of the providers of these services and monitor their effectiveness through independent audits.
- Propose to the National Assembly the promulgation of a Law that considers the increase of healthy taxes up to the levels recommended internationally.
Likewise, they ratified their commitment to contribute to the design and implementation of public policies aimed at promoting well-being. (YO)
Source: Eluniverso
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