Know where Ecuador's economy is headed.
The bill to combat the Covid-19 crisis is a draft bill proposed by the President to the General Assembly containing general guidelines of how the economic sectors of Ecuador will conduct themselves in the following nine months during the Covid-19 crisis.
In this blog, you will find a summary of the main economic aspects of this draft bill. Other aspects of the bill, such as the economic causes and the political context of Ecuador in the Covid-19 crisis, will be added later.
The draft bill proposes two main ways to support the Ecuadorian economy: a mandatory contribution and subsidies for certain social sectors.
1. MANDATORY CONTRIBUTION
Anyone who has a monthly income of over USD $500 will have to monthly give part of the income to a governmental account, managed by a civil society council, with the sole purpose of facing the social problems of the Covid-19 crisis. The civil society council will be elected by the President and supervised by public institutions.
The value of your contribution depends on the following chart:
1. Minimum monthly net income
2. Maximum monthly net income
3. A base dollar rate in USD
4. A rate from the surplus of the average between minimum and maximum income
1 2 3 4
The contribution will be a sum of the base dollar rate (column 3) plus the rate from the surplus of the average of minimum and maximum income ( 3 + 4 ).
For example, you have income of USD $550. So, first the base dollar rate of contribution (column 3) applies, in this case, you will contribute with USD $2. Then, according to the chart, you have a surplus of USD $50 ( column 2 - 1 ), and on this surplus a 1% rate is imposed (column 4), resulting in USD $0.50 cents. In total, your contribution will be USD $2.50 per month.
The contribution includes business managers of companies registered in Ecuador, and foreign residents in Ecuador.
If you are a resident in Ecuador and have an income from a foreign source the mandatory contribution could apply to you unless you have declared a tax residence in another country.
Companies that have utilities above one million dollars (USD $ 1,000,000), will also contribute to 5% of their net utility, and only if they have not been seriously affected by the crisis.This will be determined by a following government resolution.
The President, the Ministers and Vice Ministers, will contribute with 50% of their salary, and public officials who work for the President’s public office will contribute with 10% of their salary, during the 9-month period. After this period, all public officials who work for the President and who have a monthly salary of USD $1,000 will have their salary reduced by 10%.
Public workers in the health, education and public forces sector are exempt from these measures.
2. SUBSIDIES FOR CERTAIN SOCIAL SECTORS
During 2020, nurseries, schools, and universities cannot suspend classes due to the delay in payment of pensions.
Rental sector During the quarantine plus 60 additional days, a tenant cannot be evicted, with the condition that they are paying at least 20% of the rent.
Health insurance During the sanitary emergency, it is prohibited to terminate health insurance plans if there are payment delays up to 60 days after the payment deadline. Basic services During the 6 months after the draft bill is enforceable, it is prohibited to increase basic service rates, including public and private telecommunication services.
Social security (IESS) From April to July of 2020, the Institution of Social Security (IESS) will extend coverage for an additional 60 days to people who have lost their job.
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