Ecuador needs about $1.020 million to deal with the violence that has forced the country’s President Daniel Noboa to declare a state of “internal armed conflict” against organized crime groups.
Deputy Economy Minister Daniel Falconi explained at a press conference the reasons that prompted the government to propose increasing the value added tax (VAT) from 12% to 15% – to generate this amount equivalent to 930 million euros. .
Last week, the government sent to the National Assembly (Parliament) a bill known as the Organic Law for the Resolution of Internal Armed Conflicts, Social Crisis and Economy, which includes an increase of three percentage points, but the Correist bloc (majority) has already warned that it will not support his.
The government estimates that a 15% VAT would mean an increase in revenue of $1.306 billion (€945 million) a year, and if applied from March next year, it would amount to $1.071 billion (almost €980 million) in 2024.
“This state of war is costing Ecuador a lot, we are making great efforts, but there can always be more,” said Economy and Finance Minister Juan Carlos Vega when asked about the cost of the conflict.
“With an enemy as large as drug trafficking with virtually unlimited resources, it is impossible to have any idea” of the necessary budget, he said, before asking citizens to be confident that resources will be found to “win this war.” “.
However, Falconi emphasized that “sustaining military operations could cost approximately $1,020 million to maintain operations as currently defined by the military.”
The government official also recalled that the executive branch has millions of dollars in debts inherited from the previous government.
Trade unions called the proposal to increase VAT a “garrote” and put forward a moratorium on external debt for this year as an option, but Vega said at a press conference that such a measure would “significantly complicate the situation in the country,” since it would close external financing options even more than calculated by increasing VAT and other measures.
On the other hand, if the population is perceived abroad to also pay the costs, this will open up the possibility of support, he said, defending the government proposal, which highlighted that Ecuador has one of the lowest VAT rates in the region.
The country has plunged into a crisis of violence that led President Daniel Noboa’s government to declare an “internal armed conflict” last Tuesday, a day marked by terror and chaos attributed to organized crime groups, including attacks, bombings, kidnappings and murders. police officers and an armed attack on a television station.
The wave of violence came as Daniel Noboa prepared to implement a plan to regain control of prisons dominated by criminal gangs.
Ecuador has been gripped by violence after becoming a major export destination for cocaine produced in neighboring Peru and Colombia.
The government classified organized crime groups as terrorist groups and military targets.
Author: Lusa
Source: CM Jornal
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