Diana Izurieta-PUBLIC FINACE

Regulations of taxes in Ecuador under Correas government

During the presidencies of Rafael that became in late 2006, 10 tax reforms have been putting in practice. All this tax reforms have led an impact that is not only reflected in income digits but also had a negative impact in foreign investments. Montecristi, hydrocarbons, Green taxes, the production code and the last one is directed to private banks in order to finance a social program from the government in which they will increase the poverty bond from $35 to $50. These reforms had been driven with one goal: balance the public finance and increase the incomes to the FISCO. In six years of government the tax revenues had increase in 143%, this increment generated to the FISCO in 2012 USD 11000 million. In an economic view this is positive for the country the best way to redistribute incomes is with taxes, is can be seen as a disincentive for de development of production activities and is going to generate unemployment in the country. Since 2007 to 2012, the tax burden in Ecuador had increase from 14,4% to 19,7%. This increase of taxes is affecting the private sector in such a way that they cannot afford many taxes. The government of Correa is so focus in improving the redistribution of incomes in Ecuador that they are no promoting the support for the private sector. The creation of the tax to the outcomes of currencies that in 2012 generated around USD 944,7 million and the Minimum Payment for the tax income tax had been cataloged as regressive and negative for the promote of foreign investment. The first tax reform was in 2007, when Correa decided to increase the Rent tax, from 25% to 35%. %. The ICE tax was eliminated for the telecommunications services but in the other hand they increases on taxes like: Cigarettes(Tobacco): Blond 98% Black 18% Beer 0% Carbonated Beverages 10% Spirits 32% Land vehicles up to 3.5 tons 5% Airplanes and helicopters; except those used for passenger transport 10% They also eliminated fiscal shield. They increase the tax of special consume at 9,5%, the tax on motorized vehicles to 6,9%.

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The second reform came in 2008, where they introduce modifications on the rent tax system anticipate, which was not consider for tax payments if they dont used it for 5 years. On Hybrid cars they gave an exoneration of IVA and ICE taxes because they implement the Green taxes. In a way to increase financial programs, the government reduces the tariff on the rent if the profits were reinvested on this program. The amount collected during this year permitted a fulfillment of the General Government Budget of 112,1%, this percent is higher than the expected and represent USD 668,8 million to the coffers (arcas fiscales).

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A new regulation became in 2009, in which the income of companies are exempt of the payment of rent taxes, public companies are exonerates of taxes of cars property. In this period the SRI collected USD 2552 million, reaching and increment of 7,7% comparing whit the previous year. Also for IR retainer they collected 6,8% more.

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The government eliminates the 44% for the oil rent, and in order to increase the investment outside the big cities, the government exonerate all taxes to investment that are made outside Quito and Guayaquil. In this year the IVA increase whit 21,7%, the ICE with 18,3% and the IRG whit 4,8%.

In 2011 the government crated an environmental tax is made for the automobile contamination, with exoneration to hybrid cars, buses, taxis, transportation related to production activity. In the case of the last reform, The Redistribution Social Act Expenditure will be used to finance the increment of the BDH (Bono de Derecho Humano) from USD 35 to USD 50. Not only that bank profitability will decline in 2013 (to 2.59% for large banks, banks 5.15% -3.30% in medium and small banks), but will bring a restriction on the granting of credit, liquidity and private consumption.

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Bibliografa
cip.org. (November de 11). Recuperado el 23 de September de 2013, de http://www.cip.org.ec/attachments/article/116/Estudio-CIP-La-Carga-Tributaria-enel-Ecuador.pdf elcomercio.com. (22 de January de 2012). Recuperado el 23 de September de 2013, de http://www.elcomercio.com/sebastian_mantilla/reforma_tributariabono_de_desarrollo_humano-economia_0_839916011.html SRI. (s.f.). Recuperado el 23 de September de 2013, de http://www.sri.gob.ec/web/guest/estadisticas-generales-derecaudacion?p_p_id=busquedaEstadisticas_WAR_BibliotecaPortlet_INSTANCE_E Vo6&p_p_lifecycle=1&p_p_state=normal&p_p_mode=view&p_p_col_id=column3&p_p_col_count=2&_busquedaEstadisticas_WAR_BibliotecaPo