Ecuador wants to tax workers and companies to pay for earthquake relief

Ecuador’s president wants people in his country to dig deeper into their pockets—and even into their paychecks— to help bankroll the country’s recovery following a devastating 7.8-magnitude earthquake that killed 570 people and left thousands homeless last Saturday.

After touring the country’s most affected coastal provinces on Wednesday, President Rafael Correa announced a new series of “temporary economic measures,” including a 2% hike on a national sales tax, a one-time .9% net wealth tax on individuals worth more than $1 million, and a one-time 3% profit tax on companies.

The president’s plan also calls for a progressive tax scale on people’s paychecks, forcing workers to earmark one day’s pay each month to an earthquake recovery fund. Individuals earning more than $1,000 a month will have to make a one-time, one-day pay into the fund. People earning $2,000 a month will have one day’s pay deducted for two months; those earning $3,000 will pay in for three months, etcetera up to $5,000 paychecks, which will be taxed for five months.

Correa said that the measures, which he says oblige everyone to contribute “according to their ability,” could help the nation to recover from the earthquake, whose damages are expected to cost somewhere between $2 billion to $3 billion.

But the economic recovery plan is already being met with some stiff opposition by government critics on social media.

“The worst disaster that has happened to Ecuador is this president,” tweeted Juan Andres Neira. “People have gotten together to help and he looks for divisive measures”

“It would’ve been easier to make donations [for earthquake recovery] tax deductible, that way he could’ve raised more funds,” another critic tweeted.

The president’s supporters also took to social media to defend the emergency tax plan.

“We must be thankful that this earthquake is only hitting our pockets, but for others it cost them their life,” wrote Diany Dominguez, a Correa supporter.

It’s not the first time that Correa, an economist by trade, has stirred controversy with his tax plans.

Last year, a proposed tax on inheritances worth more than $35,400 led to protests around the country that lasted for weeks.  A recent plan by the president to tax soft drinks and beer, as well as bank transfers that take money out of the country, also prompted some Ecuadoreans to take to the streets earlier this month to protest against Correa’s big government initiatives.

But with the country still in mourning and just starting to recover from the earthquake, it might be unlikely for grumblings over the new tax plan to turn into protest. Indeed, some of the president’s most vocal opponents are urging people to carry on with reconstruction.

https://twitter.com/carolinajaume/status/722966956278734848

“If we have to tighten our belts so be it, but let’s continue to show our solidarity,” wrote Carolina Jaume, an actress that regularly criticizes the president on Twitter. “There are those who have less than us, and we will emerge from this obstacle, like we have in the past.”

Manuel Rueda is a correspondent for Fusion, covering Mexico and South America. He travels from donkey festivals, to salsa clubs to steamy places with cartel activity.