Page 9 - MONTT LATIN AMERICAN MAGAZINE, MARCH, 2018, ENGLISH

Ecuador: Debate on the Amazon Law and
the Repeal of the Capital Gains Law
Intense activity develops the National Assembly of the country when debating and examining the Law that will regulate the development of the Amazon and the norm that will repeal the Capital Gains Law, to avoid the speculation of the land.
The National Assembly initiated the debate on the so-called Amazon Law, which creates the guidelines for ordering the territory of that area, observing the social, economic, cultural and environmental aspects, considered by that country as necessary to guarantee human development and respect for the rights of nature. The objectives of the bill are to promote equitable development, the conservation of ecosystems, its sustainable development, biodiversity, the right to education at all levels, its cultural heritage, what legislators call social memory, interculturality and plurinationality, in order to compensate what parliamentarians estimate as existing inequities.
The initiative will be financed with the Amazon Sustainable Development Fund and the Common Fund for the Special Amazon Territorial Circumscription. The first entity will operate under an allocation equivalent to four percent of the sale price for each barrel of oil extracted in the region, which in no case should be less than two dollars. The second Fund will obtain resources of 60 percent of mining royalties, in accordance to the provisions of the Law of the mining sector; 30 percent of the surplus of the public electricity generating companies in the operation phase and 12 percent of the profits of the hydrocarbon activity.
Distribution of Financing
The project foresees that within the first 10 days of each month, the Central Bank will directly transfer the resources of the first fund according to the following distribution: 26 percent for autonomous Amazonian decentralized provincial governments; 58 percent for municipal governments; 10 percent for rural governments and six percent for the Common Fund, which will be administered by the Technical Secretariat of the Special Amazon Territorial Circumscription. These resources will be used by provincial decentralized autonomous governments or exclusively for investment in productive and agricultural development, roads and intermodal transport system and environmental management and repair. Also for municipalities, for investment in public services of drinking water, sewage, wastewater treatment, solid waste management,
sanitation activities, environmental management and repair, and rural governments, for investment in their competencies. On the social aspect, the education system will be strengthened at all levels, as well as research, training and training.
Likewise, it is expected to establish preventive medicine programs, encourage the operation of teaching and research hospitals that incorporate natural medicine and ancestral knowledge and decent housing programs appropriate to the environment and priority attention to vulnerable groups.
Capital Gains Law
On the other hand, the plenary of the Assembly is ready to analyze the report for the debate of the bill that prevents speculation on the value of land and taxation, called the Capital Gain Law.
Its repeal is expected, which is the result of the referendum held on February 4, where 63 percent of Ecuadorians voted in favour of eliminating that legal body. According to the report, the regulation, approved in 2016, generated a debate and affected the real estate market and the construction sector.
According to the Association of Real Estate Developers of Ecuador, the Capital Gain Law in the last two years decreased the Gross Domestic Product at least by 1,500 million dollars. In addition, the association explained, the provision left 115,000 people unemployed and caused the closure of construction companies.
The country registers a housing deficit of 110,000, due to the promulgation of that norm. The law did not control land speculation, but paralyzed the sector and generated distrust to invest. Therefore, the association explained, there are several held back real estate projects. The publication of Quarterly National Accounts of the Central Bank coincides with the real estate representatives: the housing construction industry registered a decrease of -1,7 percent in the second quarter of 2017 and of -7,9 percent with respect to the second semester of 2016. The report confirms that the fall of the sector affects the job offer and ended up increasing the unemployment rate in the country.
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