The president of Ecuador, Daniel Noboa, sent a bill to the National Assembly (Parliament), in which he proposes an increase of three percentage points in Value Added Tax (VAT), reveals the document released this Friday (12) by government.
The bill, titled “Organic law to address internal armed conflict, social and economic crisis”, calls for an increase in VAT from 12% to 15%. “The revenue impact of increasing the VAT rate to 15% would imply an increase of US$1.306 billion (around R$6.3 billion)”, according to government calculations contained in the document sent to the Assembly last night , which states that the measure could come into force on March 1st.
This Thursday (11), Noboa predicted that complex actions would have to be taken in view of the current situation. “We need to take tough economic measures and we need to be aligned because a war costs money. Therefore, we must take important actions and measures together with the Legislature,” he said in an interview on a local radio station.
In the statement sent to the Assembly, the head of state recalls the current government's complicated economic situation and highlights that the current debt situation highlights the need for proactive fiscal measures to avoid the accumulation of long-term debt.
“Increasing VAT would provide the government with a stable source of revenue that would not only allow it to repay existing debts, but also prevent the accumulation of new financial obligations, thereby promoting fiscal responsibility,” says the bill, which was sent in urgent nature, giving the Legislature one month to deal with the matter.
In the statement sent to the Assembly, the Presidency notes that, in recent days, the country has witnessed a series of violent acts, including kidnappings, mass riots in prisons and, in general, “terrorist acts”. These events, attributed to criminal groups, occurred as Noboa's government prepared to implement its plan to regain control of Ecuador's penitentiaries, many of which are internally dominated by organized crime groups.
Amid this situation, Noboa decreed this week that the country is experiencing an internal armed conflict, classified organized crime groups as terrorists and ordered security forces to “neutralize” several criminal groups accused of spreading extreme violence.
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