“The country is going through its worse tragedy in the past 67 years, the Ecuadorean president said.
After visiting the affected areas after the earthquake for four days, President Rafael Correa said that the necessary massive reconstruction efforts will require five new tax measures in order to fund them – as allowed by the Constitution in a State of Exception.
“We have experienced the greatest tragedy in the last 67 years,” said Correa, adding that reconstruction will take years and cost billions of dollars.
His government will soon introduce the following measures to the country’s National Assembly:
Ecuadoreans will be taxed one day of salary if they earn up to a thousand dollars per month for one month, they will be taxed two months when they earn two thousand dollars per month, and so one – up to five months, on the principle of progressive taxation.
Sales tax will be raised by 2 points for one year, meaning from 12 percent to 14 percent.
Anyone who earns more than US$1 million will be taxed one time 0.9 percent per person.
A 3 percent tax will be imposed on company profits.
Some of the assets resulting from the recent public investment will be sold.
“The pain of one, is the pain of everyone,” he concluded, praising the collective effort made so far by individuals, state agencies, international organizations, and the private sector.
According to initial estimates, 90 percent of Jama and 95 percent of Canoa have been destroyed, reported teleSUR’s correspondent Lucho Granadas Cejas.
“Canoa, for example, lives mostly from tourism, and the damage will mean a drop of visitors, so residents will require immense help from the government,” Granadas Cejas said. In the province of Manabi, authorities estimate that 8,000 stores out of 18,000 have bee destroyed.
Ecuador has access to 600 million in lines of credit from various regional organizations, but the recovery costs are estimated to reach about 3 percent of GDP, approximately US$3 billion.
Taxes on income and profits accounts for just 4.1 percent of Ecuador’s GDP, compared to an average of 11.4 percent in OECD nations.