Ecuador will increase the Value Added Tax (VAT) from 12% to 15% starting in April, to generate resources to combat drug trafficking in the midst of a security crisissaid this Wednesday the Minister of Economy, Juan Carlos Vega.
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“We are going to start with the 15% VAT to actively sustain the successful campaign to combat insecurity,” the official told the channel. Teleamazonas.
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On February 9, given the lack of agreement in the Legislature (in which the ruling party is a minority), President Daniel Noboa's proposal to increase VAT obtained the green light by law.
The president set an increase of 12% to 13% with the power to raise it to 15% according to the country's economic needs.
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The increase will take effect from April, when the law is published in the Official Registry (Diario) and the Ministry of Economy issues a report recommending the increase to its maximum limit due to “fiscal emergency”Vega explained.
At this time we must support the VAT to maintain security and we will monitor the economy.
“At this time we must support the VAT to maintain security and we will monitor the economy,” he said.
With the increase to 15%, The Executive estimates that it will raise an additional 1.3 billion dollars per year to finance the fight against criminal gangs associated with international drug cartels..
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Vega added that the government has prepared a plan so that fuel subsidies are distributed differently among those who need it most.
The possibility of eliminating fuel subsidies has sparked violent indigenous protests in the past.
The powerful Confederation of Indigenous Nationalities (Conaie), which participated in revolts that overthrew three rulers between 1997 and 2005, cornered former presidents Lenín Moreno (2017-2021) and Guillermo Lasso (2021-2023) when they announced fuel price increases .
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The Executive estimates that the country will grow 0.8% this year compared to a forecast of 2.6% for 2023; Inflation will be 2.1% and the fiscal deficit will be 4,809 million dollars.
The government estimates that the 2024 GDP will be $121.71 billion.
AFP
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