QUITO ( Associated Press) – President Guillermo Lasso announced on Tuesday a reduction in taxes on the outflow of foreign currency, soft drinks, alcohol, beer, plastic bags and weapons, with this aim, he assured the president of favoring savings given the dynamism of the Ecuadorian and economy.
On radio and television, he expressed that putting the state’s finances in order was evident in works and services, but it should also go in favor of households. He offered in his message that he would be able to count with more money in his pocket as a result of the tax cuts.
This is the second time the Lasso government has taken such tax measures, the first being in 2021 when taxes on cell phone packages, water heaters and electric vehicles were eliminated, among others. However, what was offered on Tuesday night indicated a widening shortfall.
The announcement comes less than a month before the election of municipal and provincial officials and a popular consultation proposed by the executive focused on security issues, which could become a measure to manage the lasso, in May 2020.
The biggest reductions ordered on Tuesday are in the arms and ammunition sector, which goes from 300% to 30%. The president argued that “in this way we will facilitate the legal provision of the necessary tools for the fight against crime.”
He also specified that by December of this year, the tax on the outflow of foreign currency would be reduced by two points. It will go from 4% to 2%. This tax, created during the Rafael Correa administration, taxes capital outflows as a measure of restriction in a dollar economy that does not issue its own currency.
The tax reduction would result in lower costs of importing machinery, import popular consumer products and, according to the president, “encourage the arrival of new investments that will boost our overall economic and employment proposition.”
Lasso also promised to reduce the value-added tax from 12% to 8% during the Carnival, Easter and Day of the Dead holidays so that Ecuadorians can get more out of the holidays and boost the economy of tourism businesses.
Regarding mass-consumption products, he assured that he would reduce taxes on non-alcoholic beverages—sodas—but also on industrial and craft beer, pure alcohol, and plastic bags. He did not give figures for the reduction in these points.
According to the president’s calculations, this decision would cost the public exchequer $140 million.