Redistribution of wealth is creating political unrest in Ecuador

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The current fixed table of inheritance tax is 35%, but with the reform, it could increase to 47.5%, depending on specific amounts. Although, the Government has already started conversations with some businessmen, raise the rate and the base amount for the inheritance tax and set a tribute of 75% for the extra income for the sale of real estate is still scandalous.

Especially for the mayor of Guayaquil, Jaime Nebot, who yesterday issued a warning to the Government of Rafael Correa, saying he should hear the voice of the people or take responsibility for the consequences.

Given the new national context, experts have indicated that the situation in the neighboring country is nothing more than the symbol of a political malaise among the most favored sectors of Ecuador.

Gustavo Acuña, director of the Observatory of International Finances, of the National University, pointed out that "in Ecuador, there is no crisis, the fact that a specific part of the population has come out to protest the expectations of new taxes on heritage and wealth. It implies that there is a crisis in Ecuador. The country is economically better than Colombia, in the nation, the standards of living are being achieved, the enormous investment in infrastructure, a decrease in the inequality of wealth; and it is evident that when a sector of the population is going to be affected by taxes, it will protest ".

The defenders of the measure have declared that the projects could help to combat the levels of extreme poverty and inequality, where close to 90% of the national wealth is concentrated in only 2% of the Ecuadorian families.

"In Colombia, the situation is not different; the distribution of income is quite dramatic; 20 % of the wealthiest people have 60% of the revenue, the poorest 80% have 40%. If something were done in the country and measures of this kind were taken, it would lead to a revolution, what happens is that in Colombia we have not done anything ", explains Luis Nelson Beltrán, Ph.D. in integration and economic development.

With all this political pressure, Mr. Correa has had to relax his position. In the last conversations with the Ecuadorian businessmen, he said that whoever receives "a house with a pool (an unproductive asset) will have to pay more, than one with a company, because that could affect the progress of the business, production, and employment of the country."

The president also assured that there should be no doubts regarding the currency, since dollarization will continue in the country, a system adopted since 2000.

Quito and Guayaquil marched against Correa's reform

Chanting "Correa out, Correa out," in the capital of Ecuador, Quito, and Guayaquil, the second most important city in the country, demonstrators showed their objection with the proposals of President Correa. The mobilization summoned by social networks was joined by the opposition mayor of Guayaquil, Jaime Nebot, who headed the one held in his city, and ended the demonstration with a speech against all the policies of the Government of Alianza País party. The mayor of Quito, Mauricio Rodas, also joined. The leaders were very critical of the laws that seek to increase taxes on inheritance and surplus-value.

The opinions

Gustavo Acuña

Observatory Director of International Finance, National University

"Ecuador is economically better than Colombia, is achieving high standards of living, social investments, infrastructure, and reduction of inequality."

Luis Nelson Beltrán

Ph.d. in integration and economic development

"Correa has managed to maintain confidence and unity in the midst of changes that have taken place; the tax against inheritance is to fight against maldistribution."

#Ecuador #RafaelCorrea #Economy #Reform