2024-01-19 05:05:00
The draft decree to raise the VAT rate to 15% has not had a favorable response in the National Assembly. And neither in the various sectors of the country, with clear opinions against it. The proposal comes at a time when the economic crisis that affects the least favored sectors of the country should not deepen.
In the current moments of economic hardship for the majority of Ecuadorians, the proposal has no basis, at least for two very clear reasons: the increase in VAT will raise the price of goods and services and this will immediately cause a contraction in consumption; and, it is possible to identify alternative measures that can achieve the same objective without affecting the economy of the population, especially low-income people. These have already been suggested by different sectors, with solid arguments.
The lack of synderesis and a discriminatory stance in government policy in this matter are evident: the recent approval of the amnesty or forgiveness in favor of debtors with high economic capacity who do not comply with their tax obligations, contrasts with the onerous provision to which the entire Ecuadorian population would be subject, without distinction of their capacity to assume it and regardless of any principle of justice that must prevail in tax policy. The impact of the rate increase on the purchasing power of the middle and popular classes is not the same as what it would have on the luxury and selective consumption that characterizes the wealthy classes. This circumstance exacerbates the population’s distrust and rejection of accepting new taxes. Therefore, the presidential proposal loses social viability by not achieving the agreement of the population with their frontal support for achieving the stated objectives.
The increase in VAT is not a new proposal, as it has been frequently expressed by sectors that do not participate in the importance of structural reforms that are inserted in a process of efficiency, tax and social justice. At the current time, due to the urgency of resources, the sectors in favor of this measure estimate that with its application it would be possible to feed the budget to advance the fight against the mafias. They are proposals that privilege the quantitative result, hiding the social meaning of the reduction in the population’s consumption capacity.
The VAT tax is one of the main sources of income that the State has, but the tax system must be guided by distribution criteria that ensure fair burdens and benefits among taxpayers. In that sense, the responses that the country must give to the government proposal must point towards the identification of other concrete ways to solve the economic problem that the internal war means, which at the same time ensure the fair participation of the most powerful sectors in the contribution of resources, depending on the results obtained in their economic activity.
Likewise, a policy of immediate elimination of privileges of any kind, the targeting of subsidies, the suppression of superfluous expenses and other measures that free up resources without affecting the capacity of the State to fulfill its functions is also imposed. The tax must always be linked to concepts of equality, justice and development.
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