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The correísmo with Lasso? The controversy over the entry into force of the Economic Development Law in Ecuador

This week the Organic Law for Economic Development and Fiscal Sustainability after the Covid-19 Pandemic came into force in Ecuador, presented by President Guillermo Lasso, after its publication last Monday in the Third Supplement of the Official Registry.

The regulation, which mainly makes tax reforms, has been described by its detractors, including the indigenous Pachakutik party, as “a severe blow against the popular and middle sectors of the country.” From this political awning they indicate that “the weight of the crisis is shifting on the shoulders of those who have suffered the blows of the pandemic” and “no steps are being taken to establish a true tax justice, so that those who have the most pay”; furthermore, they maintain that with this text, the Government “has been able to fulfill the commitment with the International Monetary Fund”.

Regarding this law and, particularly its promulgation, a controversy has arisen due to the vote to which it was submitted last Friday in the National Assembly and which, to date, is cause for confusion.

Process in the Assembly

The bill was sent by the Executive to the National Assembly on October 28, as an “emergency in economic matters”, which means, according to Article 140 of the Ecuadorian Constitution, that Parliament has a term of 30 days to approve, modify or deny it upon receipt.

On November 2, the Legislative Administration Council (CAL) rated the document and forwarded it to the Economic Development Commission for analysis. This instance approved a report and later sent the regulations for a first debate in the plenary session of the Assembly on November 16, where observations were made. There was no vote in this session.

After that first debate, on November 19 the Economic Development Commission approved the majority report for the second discussion of the regulations, with the suggestions made in plenary three days before. At the same time, the correista caucus – supporters of former President Rafael Correa and main opponents of the government – Unión por la Esperanza (UNES) prepared a minority report on the project.

On November 24 and 26, the second debate on the bill was held and four motions were put to a vote on the last of those days.

The first was presented by Francisco Jiménez, from the ruling party Creando Oportunidades (CREO), which requested full approval of the project, with the text that was previously sent to the General Secretariat of the National Assembly; that is, the majority report that the Economic Development Commission approved for the second debate. It obtained 30 affirmative votes, 88 negative votes and 19 abstentions, therefore it was not approved.

The second motion was from Esteban Torres, from the Social Christian Party (PSC), which asked to deny the majority report of the second debate of the project and, instead, proceed to decide on the vote of the minority report of UNES. His proposal obtained 90 votes in favor, 28 negative and 19 abstentions; so that It was approved.

The third motion was that of Carlos Zambrano, from UNES, who asked to approve the text of the Law coupled with the minority report of the correista bench. He got 48 votes in favor, 27 against and 62 abstentions, among them those of the PSC, which had initially shown its support. Finally, it was not approved.

AND the fourth motion was presented by Mireya Pazmiño, from Pachakutik, who asked to deny and archive the project sent by the Executive. His proposal reached 53 votes in favor, 3 against and 81 abstentions, among them those of UNES; Thus, it was not approved either.

The promulgation and defense of UNES

After that vote, the Ecuadorian Executive considered that the National Assembly had not “approved, modified or denied” the bill.

Therefore, Lasso promulgated its regulations as “Decree-Law” and sent it to the Official Registry for publication last Monday, based on article 140 of the Constitution and 62 of the Law of the Legislative Function that, in relation to Urgent bills in economic matters says: “By decision of the plenary session of the National Assembly, a bill may be filed. When within 30 days the National Assembly does not approve, modify or deny the bill classified as urgent in matter economic, the president or president of the Republic will promulgate it “.

However, the controversy over the regulations was just beginning. After the vote in the plenary session of the Congress, in which UNES abstained in the motion of Pachakutik that expressly spoke of filing the document, it was rumored that there had been a pact between the correista bench and that of Lasso, which would allow the advancement of the Government’s project, a question that was denied by the legislators.

“Can we agree with a government that has obviously turned its back on the Ecuadorian people? Well, no. We categorically reject those attempts to position this new media framework that the UNES bench has a pact with the Government, there is no such pact“said legislator Paola Cabezas, from the correista bloc.

The assemblywoman pointed out, in defense of her bench, that “that law was denied three times”, when referring to the votes against Jiménez’s motion received, the votes in favor of Torres’s proposal and the negative of Zambrano’s third proposal.

Cabezas also said that the president of Parliament, Guadalupe Llori, and the institution’s secretary general, Álvaro Salazar, “will have to respond to the country.” This is because in the letter sent to Lasso from Congress, after the vote on the Economic Development Bill, they indicate that no motion obtained the necessary votes for its approval, but they only speak of three motions, leaving aside the one presented by Torres, who textually asked to deny the report and was approved.

“Don’t you think you forgot a very important motion that received 90 affirmative votes?” Asked, for his part, on his Twitter account, Assemblyman Torres, who classifies Lasso’s proposal as “Tax Law Project.”


The same article 62 of the Law of the Legislative Function establishes that the National Assembly may, at any time, modify or repeal, subject to the ordinary procedure provided for in the Constitution, the regulations promulgated as “Decree-Law” by the president.

Assemblyman Salvador Quishpe, from Pachakutik, in an interview with Direct Contact, from Ecuavisa, said that his bench already has the repealing text ready to direct it to the National Assembly, and hopes to have the support of UNES for its approval.

Nor is it ruled out, as other parties have pointed out, bringing an action of unconstitutionality before the Constitutional Court.

What the law establishes

The law promulgated by Lasso, the first of three projects that he plans to send to the Assembly, has 225 articles and, according to the Ministry of Economy and Finance, “has been drawn up by gathering the suggestions of various sectors and politicians in the country” and is intended to target to raise 1.9 billion dollars in the first two years of validity.

Among other things, the regulations establish changes in the tax system, such as:

The value of this tax is increased for people who earn from 2,000 dollars a month, that is, 24,000 dollars a year; directly affecting the country’s middle class.

As for companies, this is reduced by three points for 15 years for new companies or new investments; and five points if they have an investment contract endorsed by the Ministry of Finance.

Natural persons who have assets of more than one million or more than two million dollars in conjugal partnership, must carry out just for once, a special contribution.

The companies in the country that have assets greater than 5 million dollars must make a solidarity contribution of 0.8% of their assets, only for two years.

The inheritance tax is eliminated for the children of the deceased, or for the surviving spouse when there are no children to inherit. The benefit is extended to heirs of deceased deceased between March 15, 2020 and December 31, 2021, who have not paid the tax.

Value Added Tax (VAT)

The sale of products such as masks, oximeters, feminine sanitary products, among others, is exempt from this tax.

12% is taxed on LED lamps, electric cookers, website domain supply, clouding and hosting, etc.

Special Consumption Tax (ICE)

It is eliminated for electric and hybrid vehicles, for juices with natural content greater than 50%, 15% is exempted for mobile and fixed telephone plans for companies and 10% for natural persons.

On the other hand, it increases from $ 7.18 to $ 10 per liter of alcohol for liquor.

Regularization of Assets Abroad

This, like the IR, is one of the most controversial points of the regulation. The law establishes the Tax Regime, Voluntary, Unique and Temporary for the Regularization of Assets Abroad.

It establishes the payment of a single tribute with a progressive rate that varies from 3.5% to 5.5% (depending on the moment in which the declaration and payment occurs) and to apply an affidavit must be submitted by the one that manifests the irrevocable will to avail itself of the regime.

“It is a tax regime so that all those people who maintain assets abroad of any kind, such as trusts in ‘offshore’ in tax havens, for example, can repatriate that capital, which opens a window to the regularization of assets of illicit origin and susceptible to being part of networks of corruption, tax evasion, and organized crime “, says, in an article, the economist Pablo Dávalos.

Edgar Romero G.

About the author

Donna Miller

Donna is one of the oldest contributors of Gruntstuff and she has a unique perspective with regards to Science which makes her write news from the Science field. She aims to empower the readers with the delivery of apt factual analysis of various news pieces from Science. Donna has 3.5 years of experience in news-based content creation, and she is now an expert at it. She loves journalism, and that is the reason, she moved from a web content writer to a News writer, and she is loving it. She is a fun-loving woman who has very good connections with every team member. She makes the working environment cheerful which improves the team’s work productivity.

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