Guillermo Lasso vows he will send tax-cut bill to Congress on his first day as President of Ecuador

RIO DE JANEIRO, BRAZIL – After winning the second round of elections on Sunday, Guillermo Lasso assured that his government will bring about a “real change” in Ecuador, after an era of the left in power marked by the figure of ex-president Rafael Correa, sentenced to 8 years in prison for corruption. According to the 65-year-old former banker Lasso, the main changes to be promoted by his administration will involve the economic sector and will include tax cuts and incentives.

During an interview with CNN, the president-elect announced that on the first day of his administration – May 24th – he will present to Congress a tax reform with the aim of boosting the country’s economy.

“The reform will not be aimed at increasing taxes. On the contrary. There is a sales tax on micro-entrepreneurs that we have to eliminate because there cannot be an income tax, but a sales tax,” commented Lasso.

In this respect, the new head of state will seek to eliminate the 2% sales tax on micro-businesses. He also announced that he will gradually eliminate the tax on foreign currency outflows during the four years of his term.

With the aim of reactivating the tourist sector, the leader of the Creando Oportunidades (Creo) movement said that he will raise the possibility of lowering the VAT tax during four holidays of the year.

“We do not plan to create a tax or increase the current rates,” said Lasso, who also clarified that he will fight tax evasion: “Do not tell me that you are a businessman of 10 or 20 years and you never make money and do not pay taxes.”

During the campaign, Ecuador’s president-elect had already promised tax incentives, credits at 1% interest and a progressive adjustment of the minimum wage up to US$500. He also stated that he will seek to create 2 million jobs and build 200,000 rural housing units.

Lasso also promised that he will propose new risk-sharing contracts with private companies in the oil sector in order to boost oil production and that he will respect the contracts already in operation.

Lasso, a conservative who advocates free trade, also stressed in his campaign the importance of Ecuador “becoming part of the Pacific Alliance, as urgently as possible”.

The new president will have to face an economy hard hit by the pandemic, but with long-standing problems, such as the lack of liquidity and a debt that grew even more during the health crisis caused by the coronavirus. To this end, he stated that he will seek “from day one a free trade agreement with the United States”.

Last year, Ecuador recorded a 7.8% drop in GDP. In addition, it has a public debt of more than US$63 billion, which represents 63% of the Gross Domestic Product (GDP). At the end of 2020, the country obtained a loan from the International Monetary Fund (IMF) for US$6.5 billion.

“A new stage is beginning for Ecuador, in which we can all live better. Democracy, freedom and Ecuadorian families won,” Lasso wrote on his Twitter account on Monday, a day after defeating Andres Arauz, Correa’s political heir apparent, in the presidential elections.

Markets welcomed Lasso’s victory after months of concern that Arauz’s plans for heavy social spending would upset delicate public finances. Ecuadorian bonds rallied on Monday with 2035 maturity papers reaching their highest level since September, according to traders.

The president-elect will take the reins of a country in crisis on May 24. He will succeed Lenín Moreno, who broke with Correa as soon as he came to power four years ago.

With the support of the United Nations, Moreno’s government is moving forward in the transition of power, a process that will focus on solving health and economic problems to rescue the country from its crisis.

“No conjunctural issue is more important than the vaccination process and the fight against covid”, said in an interview with EFE news agency the Minister of Labor, Andres Isch, warning that vaccination is intimately linked to the economy, particularly due to the urgency of reactivating the productive sectors and reestablishing the social welfare networks.

Source: Infobae