Page 16 - MONTT LATIN AMERICAN MAGAZINE, SEPTEMBER 2021 (English)

Ecuador: President Lasso Starts His New Government
With a heavy inheritance from previous administrations, the Head of Government began vaccinating a large part of the population and proceeded to present a renewed economic development plan.
Lasso’s approval high thanks to vaccine campaign
US-Ecuador Bilateral Relations Post covid
After serving almost four months in power, seven out of 10 Ecuadorians approve of his management of Government, according to the Cedatos pollster, and six out of 10 believe in his word.
The first thing that the new President of Ecuador, Guillermo Lasso, when he came to power, was to fulfill his promise for the most immediate campaign, vaccinate nine million people, something that filled with optimism and began to re-establish confidence in the Government, since this action allows companies and industries to produce with greater certainty and to stimulate a declining economy whose Gross Domestic Product (GDP) fell to -7,8 percent in 2020. Currently, three out of every 10 Ecuadorians have a formal job, while chronic malnutrition affects four children under the age of five. The public debt reaches USD $63 billion, that is, 63 percent of the national economy, and the inherited fiscal deficit is USD $ 7 billion, which deepened during the pandemic.
Thus, the President of Ecuador has just announced the points of his proposal for reforms in tax, labour and investment matters to rebuild the country’s economy and avoid what he called a “tragedy”, in a message to the nation broadcast in the media of national communication.
Opportunity Creation
This economic reform bill to be processed by the Assembly is called the “Opportunity Creation Law”, and is focused on the creation of tax contributions for a part of the population, the elimination of certain taxes, the rethinking of labour relations. and the incentive for investments in the country.
In tax matters, Lasso proposes:
• Adjustment in income tax deductions for people who earn more than USD $ 24,000 annually. This contribution would be “progressive and gradual.” • The creation of a special contribution to the “richest strata”, which would apply for two years to people with assets greater than USD $ 500,000, and only once to companies with Equity
exceeding one million dollars and that in 2020 generated profits and higher sales than in 2019.
• Elimination of VAT on accommodation for foreigners, to encourage tourism • Suspend VAT on basic products such as diapers, masks, alcohol, tampons, sanitary napkins and other feminine hygiene supplies. • Discard the tax on special consumption for mobile phone plans, video games and hybrid and electric vehicles. • Elimination of inheritance tax for children and spouse. • In order to motivate the reactivation, the Simplified Tax Regime and the Regime of Microentrepreneurs, and in its place a Simplified Regime for Popular Businesses will be created.
Labour Aspect and Investments
In labour matters, the Lasso bill warns that it will not repeal the current Labour Code and proposes: • Creation of an alternative and voluntary regime of job opportunities to access new employment modalities, which can be adjusted to the current moment and allowing telework . • A regime for start-up entrepreneurs who cannot bear the labour costs of large companies. • Accumulated vacations will not be lost • More options for maternity and lactation leave. • Extension of license for parents. • Entrepreneurs and artisans will be considered popular businesses for tax purposes.
• There will be no limits to employee profits • No profit or retirement will be touched.
To attract investment and legal security, Lasso proposes:
• Creation of the Secretariat for Public and Private Alliances; • Enable free zones, with tax incentives for agroecological, community, rural development, agricultural, logistics, tourism and health industries and transparency in customs matters.
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