Saturday, February 24, 2024

Ecuador’s AN has rejected the VAT increase proposed by Noboa

The National Assembly of Ecuador rejected this Tuesday, in the second and final debate, the increase in value-added tax (VAT) proposed by the president of the South American country, Daniel Noboa, in his draft “Organic Law to Confront the Internal Armed Conflict and the Social and Economic Crisis.”.

In the initial document, Noboa proposed increasing the VAT from 12 to 15% permanently. However, due to the refusal of the legislators to approve this proposal, it was changed and included an increase of one percentage point permanently, up to 13%, and another two points temporarily, which reached only 15% for the rest of fiscal year 2024. and fiscal years 2025 and 2026. But it also did not receive the go-ahead.

That point of the project, discussed in parts, received 83 negative votes and 43 in favor. 70 is required for approval.

Some points of the project actually received the approval of the members of the assembly. Here’s what lawmakers approved on Tuesday:

  • Temporary contribution to the income of banks, savings, and credit cooperatives.
  • The increase in Foreign Exchange Outflow Tax (ISD) is currently 3.5%, which may reach 6%, as considered by President Noboa.
  • Temporary security contributions applicable to the income of companies.
  • 5% building materials fee.

In addition, the legislators approved that the secretary of the National Assembly would correct the mistakes in the style of the project.

“Regressive”

The Executive sent this bill to Parliament on January 11, arguing that the purpose of the regulations is to “deal” with the declared “internal armed conflict” in the country.

With the increase in VAT, the state intends to raise 1,306 million dollars per year, according to the Minister of Economy and Finance, Juan Carlos Vega.

However, several groups in the National Assembly opposed this measure, pointing out that it is a “regressive” act and that it affects those who have the least.

Therefore, in the initial proposal of the president, they presented the alternatives to raising the funds needed by the state, which were included in the first debate and the analysis made by the Economic Development Commission of the document before its discussion in plenary.

World Nation News Desk
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