Thousands of protesters gathered yesterday in Guayaquil, Ecuador's largest city, to protest President Rafael Correa's policies, especially proposed inheritance tax reforms. Though Correa temporarily withdrew the contested bills from parliament ahead of a papal visit next week, protesters are demanding their permanent shelving.
Led by Guayaquil mayor Jaime Nebot, a member of the political opposition, yesterday's demonstrations -- which also took place in Quito and other cities around the country -- were part protests that have been ongoing for the past three weeks. The nominal reason is a proposal to tax inheritances up to 77.5% and a 75% tax for capital gains from real estate, though protesters are also complaining about other economic policies and "what critics describe as President Correa’s dictatorial attitude," reports the Wall Street Journal.
Correa is criticized by foes for his confrontational style in dealing with such sectors of society as the church, the press, banks and traditional political parties. Human rights groups have called him intolerant, reports the AP.
Nebot said Ecuadorians don't want to become Venezuela, and suggested protesters give Correa a "democratic kick" in the ass, reports AFP.
Government supporters have held counter demonstrations, often simultaneously, but separated by police. Correa says the new policies are aimed at creating greater equality and rejects protests as attempts to destabilize his government.
Economists say both bills will negatively affect Ecuador’s economy and families in a country where 95% of businesses are family owned, according to the Wall Street Journal. According to a survey conducted by Cedatos-Gallup International in six major cities of the country between June 10 and 11, 70% of Ecuadoreans disapprove of the capital-gains tax, while 72% disapprove of the inheritance tax.
Correa has called for a "national dialogue" regarding the projects and what social and economic model Ecuadorians want. He announced that after meeting with businessmen this week he is already proposing a modification of the new inheritance tax, reports InfoBae.
Correa is proposing that the new rate exclude working businesses that are inherited by family, as long as they are up to date on their tax payments, reports El Universal. "Inheriting a business is not the same as getting a house with a pool," he told supporters yesterday.
Over 15,000 leaders from Ecuador’s so-called “rural parish governments” were slated to hold a an assembly in support of the government yesterday, reports TeleSur.
And Correa singled out Nebot as a clear example of the progress the country has made with respect to the collection of taxes, reports TeleSur. The president observed that in 2006, before the arrival of the Correa government to power, Nebot paid just $1,994 in income taxes but by 2014 he was paying $66,593, according to figures from the government revenue agency.
The opposition mayor admitted in an interview on CNN that he would be among the richest 2 percent of Ecuadoreans that would be impacted by the proposed inheritance tax law.
Ecuador is facing economic difficulties in the midst of an oil revenue decline that surpasses 50 percent. Among other measures, the government cut its 2015 fiscal budget by about 4%; imposed import tariffs of between 5% and 45% for 2,800 products; and ordered wage cuts of 5% to 10% for high-level public sector employees. The government also has nationalized various private pension funds and passed a bill that eliminated mandatory state contributions to the pension system, estimated at about $1.1 billion this year, reports the Wall Street Journal.
Nonetheless, Correa emphasized his commitment to maintaining the dollar as Ecuador's national currency, saying the government will "maintain dollarization at any cost," reports InfoBae.
Correa's left-wing government has taken an estimated 1.1 million people out of poverty, according to official figures, reports TeleSur.
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