Fewer outings to eat, less consumption of telephone and paid television are part of the adjustments. It is also planned to pay tenths and reserve funds monthly.
One of the issues that has provoked the most rejection of the tax reform of Guillermo Lasso is the reduction of deductible expenses and the average increase of 255% in the payment of the Income tax.
The main argument against it is that it is affecting the middle class, which is the engine of consumption in the country. However, the Government has said that those who pay more since 2022 are 3.4% of the population with monthly income equal to or greater than $2,000; while the majority of Ecuadorians do not suffer any increase.
However, that small percentage of the population is the one with the highest purchasing power, and its monthly expenditure influences the domestic market demand.
For this reason, the Technological Business University of Guayaquil (UTEG) carried out a survey to understand what the royal impact in higher-income families, and if higher burdens on the Income tax They will force them to stop or substantially reduce the consumption of certain goods or services.
More than half of families will reduce their spending
54.8% of the 273 families respondents answered that the higher tax burden will inevitably cause an adjustment in the level of spending. In general terms, it was assured that going out to restaurants, buying clothes, walks and trips will have to be reduced; in addition to postponing plans to start fourth-level education programs.
However, in specific terms, the greatest savings would come from reducing consumption and mobile phone plans; and subscriptions to pay television.
Only 1% of those surveyed responded that they are seriously thinking about changing their children’s schools or stopping hiring domestic service.
The danger of monthly tenths and reverse funds
On the income side, around 20% of those surveyed pointed out that they will seek to balance the budget through measures such as the monthly payment of tenths and reserve funds.
Andrea Valladares, personal finance adviser, explained that this monthly payment is completely counterproductive because, especially in the case of reserve funds, the objective is that these resources accumulate over time and serve as an aid when staying without a job or have some important unforeseen event.
According to Valladares, ways must be found to generate extra income, not only in the current context of higher payment of taxes, but always. This is of great help to secure the personal and family budget, and even reduce the impact of phenomena such as financial stress.
The UTEG survey established that 46% of those surveyed will have to allocate between $1 and $199.99 of their income monthly to payment of Income tax; another 24% will have an affectation of up to $399.99; while the remaining 30% will have to pay $400 or more of their salary for the month.
Will it be billed less?
Another criticism of tax reform de Lasso is that, through the reduction to $5,000 per year in the limit of deductible expenses, people are being discouraged from requesting an invoice because now the reduction in the payment of tax It is much smaller compared to what happened before.
According to the UTEG survey, 69.2% of people who earn $2,000 or more will continue to request invoices as normal, without any change or discussion. However, 24.9% responded that they would no longer request any type of sales receipt because it is of no use to them.
Javier Bustos, a tax attorney, considered that this last position is absurd, and can become a boomerang for the taxpayers themselves.
“If you feel affected by the reform, because the payment increased considerably, all the more reason to ask for an invoice everywhere so as not to encourage informality. If it does not, a reality will continue to be reproduced in which more weight is placed on the few formal ones to compensate for a majority that is outside the system. That is to say, you would be playing against yourself”, he concluded. (JS)
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