Ecuador raises taxes to pay for earthquake damage

President Rafael Correa is raising taxes and imposing a one-off levy on millionaires to rebuild cities devastated by Ecuador’s worst earthquake in decades.

In a televised address, Mr Correa said damages from the 7.8-magnitude quake would probably run into the billions of dollars, adding to already heavy economic hardships in the OPEC nation triggered by the collapse in world oil prices.

The task of rebuilding should not fall only to communities in the quake’s path but would require sacrifices from all segments of Ecuadorean society according to their ability to contribute, Mr Correa said.

“I know we’re at the most-difficult stage right now but it’s just the beginning,” he said.

Using authority granted by the state of emergency he declared after Saturday night’s quake, Mr Correa said sales taxes would increase to 14% from 12% for the coming year.

People with more than $1million (€880,000) in assets will be charged a one-time tax of 0.9% on their wealth, while workers earning more than $1,000 (€880) a month will be forced to contribute a day’s wages and those earning $5,000 (€4,400) a month the equivalent of five days’ pay.

Taxes on companies will also go up and Mr Correa said he would look at selling certain state assets but he did not say which. He is also drawing on $600m (€529m) in emergency credits from the World Bank and other multilateral lenders.

The tax increases come as the scale of devastation continues to sink in. A helicopter flyover of the damage zone showed entire city areas in ruins as if they had been bombed.

The latest death toll stands at 570, with163 people as missing and more than 23,500 made homeless. The final death toll could surpass casualties from earthquakes in Chile and Peru in the past decade.


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