Ecuadorian Parliament approves the repeal of Guillermo Lasso’s tax reform

The National Assembly (Parliament) of Ecuador, with an opposition majority, approved this Tuesday (11.29.2022) the repeal of the tax reform of the president, William Lassoas anticipated by his Minister of Economy and Finance.

With 100 votes in favor of the 129 assembly members present, the Ecuadorian Legislature took the step to repeal the tax reform just one year after the Lasso government issued a decree of the “Organic Law for Economic Development and Fiscal Sustainability after the Covid-19 pandemic”.

The tax integration was necessary to increase the state’s collection, as part of the credit program that Ecuador maintains with the International Monetary Fund (IMF), worth 6,500 million dollars, and which ends at the end of the year.

The tax reform changed income tax brackets for individuals and significantly reduced expense deductions, from $14,000 to $5,000.

Nine parliamentarians took part in the debate in the plenary session of the Assembly who, with this law, asked for economic damages to the middle class and popular sectors, according to a press release from the Legislator.

The interveners underlined that there is no legal impediment to the Executive to repeal the provision which they define as harmful.

the deputy Naomi Cabreraof the parliamentary group of Union for Hope (Unes), close to the former president Raffaele Correa (2007-2017), stated that, after a year of validity of the law, the benefits for citizens have not been highlighted, who, on the contrary, have been affected by having to pay more taxes.

“Brawl Against Citizen Welfare”

“The burden of the economic crisis should not fall on middle-class Ecuadorians. Half a million citizens no longer belong to this segment,” Cabrera said.

Meanwhile, the Minister of Economy and Finance of Ecuador, Pablo Arosemenahe announced that Lasso will veto the abrogation of the tax reform “because it is unconstitutional and demagogic”, specifying that “bills on tax matters can only be presented by the president (article 135 of the Constitution)”.

“Asking for more spending and eliminating its funding is working against the well-being of the citizen,” observed Arosemena.

The law was promulgated by Lasso on November 29, 2021 after the Assembly did not pronounce itself either in favor or against the presidential project, thus starting its approval in absentia.

It was not the only economic setback of the day for the Government, given that hours earlier the Assembly had already observed the general budgets presented by the Executive, so that they return to the Ministry of Economy.

The chamber returned the balance sheets with observations on the growth projection of the gross domestic product (GDP), whose 3.1% for 2023 it judges too optimistic, and on the estimate of the average price of the barrel of oil, where it believes that it is prudent when expects 65 dollars a barrel.

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