Ecuador raises the basic salary to 425 dollars after increasing the tax burden | Economy

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An employee of the San Roque Market in Quito (Ecuador).
An employee of the San Roque Market in Quito (Ecuador).

The Christmas bonus that Ecuadorians will receive is 25 dollars by decision of their president, Guillermo Lasso. Workers who earn the basic salary will earn $ 425 each month from January, as announced by the president of the Latin American country this Monday night. Until now, the minimum wage was $ 400. He accompanied his decision with a speech that sounded like the end of the year with his duties fulfilled, despite the political ups and downs that have eroded his image before the public.

Lasso had promised in campaign, at the beginning of the year, that if he arrived at the Carondelet palace he would raise the basic salary from 400 to 500 dollars. Once in power, he qualified that offer by clarifying that the $ 100 hike would be prorated over four years and as the end of 2021 approached the possibility of carrying it out was clouded. There was no agreement between the business union and the unions that meet each year with government representatives to define the basic salary for the following fiscal year. The workers asked for the 25 dollar increase, but the employer only wanted to give in three dollars. Finally, Lasso cut short the discussion by arguing the redistribution of wealth between families. “The reactivation must be felt first – and above all – in the most humble homes of Ecuador, in their food plates, in the purchases in the pantry, in the utility bills, and in each pocket of each Ecuadorian worker,” he said. in his message recorded in an industry with a group of operators behind.

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The private sector received the news with questions. Business representatives believe that the $ 25 a month increase lacks technical support and that it is only a political gesture to restore the presidential image before the public. Ecuador has not yet come out of the economic slowdown imposed by the covid-19 pandemic and companies predict that raising the weight of the workforce will not favor the recovery of the productive fabric but will drive away new hires.

The criticism had come from the November meetings but Lasso weighed the priority of honoring his campaign commitment. “This Government complies and not by simple electoral obligation, but by real conviction, because the people deserve it. Because it is time to improve your income. Because the first to receive the fruits of the take-off must be those who suffered the most from the crisis and the disease, “he added in his message.

The salary increase was preceded by a tax reform, also criticized by the population and by the business community, which raised taxes by 2022. The Government expects to collect $ 1.9 billion in fresh resources in two years, after cutting deductible expenses that taxpayers can present in their annual income tax return, creating a last step in this tax with a tax rate of 37% for what they earn the most – above 100,000 dollars a year – and after imposing a contribution of 1 % to 1.5% mandatory for assets that exceed one million dollars.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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