Evolution of the Impact of the Tax Reform from 2019 to 2023 on the Deduction of Personal Expenses for Individual Taxpayers in Ecuador

• Espinosa-Jaramillo, María Teresa ^[1] ; Ricón-Castillo, Elita Luisa ^[2]
  1. [1] Escuela Politécnica del Ejército

     Escuela Politécnica del Ejército

     Sangolqui, Ecuador

     
  2. [2] Centro Socioeconómico del Petróleo y Energías Alternativas, Facultad de Ciencias Económicas y Sociales. Universidad del Zulia. Maracaibo, Venezuela.
• Localización: Salud, Ciencia y Tecnología - Serie de Conferencias, ISSN-e 2953-4860, Vol. 2, Nº. 0, 2023 (Ejemplar dedicado a: Salud, Ciencia y Tecnología - Serie de Conferencias)
• Idioma: inglés
• Enlaces
  • Texto completo (pdf)
• Resumen

  • The tax reform implemented in Ecuador in 2019 generated important changes in the deduction regime for personal expenses of individual taxpayers. The goal was to increase tax collection, but it had a direct impact on people's tax burden. This study analyzes the evolution of this impact between 2019 and 2023, examining modifications in deduction limits, categories of deductible expenses and effect on tax collection and burden. The results show a progressive decrease in deductions and an increase in the tax burden. In 2019, deductions for education, health, food, clothing and housing were eliminated, setting a limit of 50 % on taxable income. For 2022 the limit was reduced to 10 % and 20 % respectively according to the basic family basket and in 2023 they were totally eliminated and that personal expenses now depend on family charges, this affected middle-high income taxpayers who previously deducted expenses.  In summary, the reform had a progressive impact on the reduction of tax benefits for individual taxpayers, facilitating greater collection but also implying a greater tax burden on individuals with medium and high incomes. The effects are evident between 2019 and 2023, although it allows more collection, it negatively affects those who previously deducted personal expenses.