Ecuador: President Daniel Noboa proposes raising VAT in the midst of the conflict with gangs

The president of Ecuador, Daniel Noboa, sent a bill to the National Assembly (Parliament) for study in which it proposes increasing the Value Added Tax (VAT) by three percentage points.according to the document released this Friday by the Government.

(Also read: President of Ecuador: Colombian prisoners 'we must leave them at the border').

The project, called the Organic Law to Confront the Internal Armed Conflict, the Social Crisis and the Economy, calls for an increase in VAT from twelve to fifteen percent.

“The revenue impact of increasing the VAT rate to 15% would imply an increase in revenue of 1,306 million dollars”according to the calculations of the Executive reflected in the document sent last night for study by the Assembly, which indicates that the measure could take effect from next March 1.

It's a statementthe Government clarified that the possible increase in VAT does not include products from the basic basketas well as food products of agricultural, aquaculture, poultry origin (milk, eggs, meat, chicken), medicines, basic services (water, electricity, telephone), passenger and cargo transportation nationwide, health, education, rental housing, feminine hygiene products, among others.

harsh measures

On Thursday, Noboa had anticipated that complex actions should be adopted in the current situation: “We must take tough, economic measures, and we must be aligned because a war costs and costs money”, said. “We must take important actions and measures in conjunction with the Legislature,” she commented in a radio interview.

(Keep reading: They are investigating whether 'Fito', the boss who unleashed chaos in Ecuador, entered Colombia).

In the statement sent to the Assembly, Noboa remembers the complicated economic situation of the current administrationand points out that in the current debt situation it is necessary to adopt proactive fiscal measures to avoid the accumulation of long-term debt.

“Increasing the VAT would provide the government with a constant source of income that will not only allow it to pay off existing debts, but also prevent the accumulation of new financial obligations, thus promoting fiscal responsibility.”indicates the bill sent urgently, so the Legislature has one month to process it.

Internal armed conflict

In the initiative sent to the Assemblythe Presidency points out that in recent days, the country has witnessed a series of violent actsincluding kidnappings, massive prison riots and, in general, “terrorist acts.”

These events, attributed to criminal gangs, occurred when the Noboa Government was preparing to implement its plan to regain control of the prisons, many of them completely dominated by organized crime groups.

(We recommend: How did Ecuador come to be in check due to criminal gangs?).

In the midst of this situation, Noboa declared a state of emergency with a curfew and declared that the country is experiencing an internal armed conflict. He described organized crime groups as “terrorists” and ordered security forces to “neutralize” criminal gangs accused of spreading extreme violence.

EFE