By Alexandra Valencia
QUITO (Reuters) – The government of Ecuadorean President Guillermo Lasso on Thursday proposed a modified tax reform to lawmakers, which would increase contributions by the highest-earning companies and raise $1.9 billion in its first two years, the Economy Ministry said on Thursday.
Lawmakers rejected a tax, investment and labor omnibus bill from Lasso, an ex-banker who took office in May, without debate in September.
The government has divided the rejected bill into three and will send them to congress, where it does not have an absolute majority, with an urgent request for approval.
“This legal reform complies with the principles of progress and tax justice and it’s expected that its approval will lead to the collection of more than $1.9 billion in the first two years,” the Ministry of Economy and Finance said in a statement on Thursday evening.
The new tax bill increases the number of businesses that will be subject to a special tax contribution of 0.8% for two years, in a bid to meet a Lasso campaign promise that those with the most earnings would pay more.
The new proposal keeps a controversial measure which will increase tax obligations for those earning more than $2,000 a month by reducing the amount of health, education and other costs they can deduct.
Individuals with a worth of more than $1 million and couples with a joint worth of more than $2 million would be subject to a one-time contribution under the reform.
Tax reform is key to Lasso’s re-negotiated financing deal with the International Monetary Fund, which is planning to review the country’s fiscal programs in mid-December ahead of a planned disbursement of $700 million.
The government has said it wants to reduce the Andean country’s fiscal deficit, estimated at some $4.8 billion, but has struggled so far to implement economic changes amid social and political opposition.
(Reporting by Alexandra Valencia; Writing by Julia Symmes Cobb; Editing by Michael Perry)
