Subsidies can be defined as follows: “charging customers a price lower than the price of a good or service” or “supporting a group of people or organizations (for example, a company) for their social or economic development”. They are neither good nor bad, you just need to be clear about their definition and usage. In Ecuadorian society, there are many subsidies granted by the state, which are actually subsidies granted by all those who pay taxes to those who benefit from said goods and services.

Perhaps the biggest one is that of social security, especially pensions. They amount to about 3.5 billion dollars and, most seriously, they are growing because in the future there will be more retirees in a poorly designed system. In old age, one gets more than what is paid in (even adding the financial rate of return on contributions). And this is happening in IESS, Issfa and Isspol and MIES (bonds for assistance to the elderly).

Are the proposals for improving the state of IESS correct? Several of our columnists say so

The subsidy for imported fuels is similar, although it varies from year to year. In 2014 it was almost 4,000 million dollars, in 2022 it was 3,500 million dollars, and in 2023 it will be 2,400 million dollars (because the international price is lower). Obviously, this is related to the price difference between imports and domestic sales, but also to the amount of fuel consumed, which is much higher than in other countries (because we waste, there is smuggling, it is used in criminal activities, etc.) . And we have to add that subsidy to the fuels produced here, but there are no regular calculations, although it is estimated at around 300 million dollars… Well calculated, it must be more.

More than 1,200 million dollars are subsidies delivered for social development, which corresponds to the bonus for human development, the bonus for malnutrition, the bonus for supporting people with disabilities or orphans, and the like. And there are also smaller items such as electricity, loans with special interest or housing.

The state of abuse of rights

… in the budget for 2023 they add 7.5 billion dollars. Lots and lots of money.

(…) which are actually subsidies, we would easily reach 20,000 million dollars.

But in reality, an important part of government spending is subsidies. For example, education: students directly pay less (or nothing) than the cost of the educational process from classrooms to computers or teachers, the difference is a subsidy. Like health, users pay less than their price. And in the same way, sewage or water can be assessed if the tariff does not cover all costs, a park or a road because the users do not pay even though their construction and maintenance cost money. This can be the case with ID cards or passports if they don’t cover all the costs (do they?) and then a huge list. Cases such as the security forces would not come into it because they do not provide a direct service to every citizen that could be paid for and are consequently paid for collectively through taxes.

Guillermo Lasso: If the exploitation of ITT stops, ‘either costs are reduced in sensitive areas or subsidies are abolished’

Between what’s in the budget and what the subsidies actually are, we should easily get to $20 billion. It is important that subsidies must meet certain criteria. To achieve a positive effect in some economic, social or institutional aspect. Be focused on those who need it most. Limited time (some more, others less)… Which subsidy meets these characteristics? (OR)