Products will increase in price with the increase in VAT.
The increase in VAT to 13%—and then to 15%—will have an impact on the country’s economy, because certain items in the production chain pay this amount. According to economists, in the end everything will rise in price.
Circumstances
The increase in VAT to 13% will come into effect in April 2024, but the President of the Republic has the power to raise it to 15%, following a report from the Ministry of Economy and Finance.
For economist Egdar Vicente, the impact on the Ecuadorian population is not minimal as stated, because 18% of the products in the basic basket are taxed with VAT.
“Citizens should know that, in the production chain, there are countless inputs, goods and services that are taxed with VAT and that affect the final product,” he said.
For example, the owner of a small supermarket or store has basic necessities, however, gasoline, oil and tires have VAT and are used by people to move from one place to another to buy, which would mean that they will have to raise prices to offset that expense.
Likewise, Efraín Girón Azin, an economics teacher, pointed out that in the country everything—no matter how small a product—has a tax and those who suffer the consequences of the increase in VAT are the people, especially the lower class, since the values are transferred to the final consumer.
He noted that, “a problem that will arise when it is reduced from 15% to 13% is that no one will want to reduce prices, no matter how many laws or regulations are established; “President Daniel Noboa will have to carefully analyze whether the increase is feasible and who it will hit the most,” he stated. (YO)
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