Andean Group - December 2011 (ISSN 1741-4466)

President Correa pushed through the legislative assembly on 29 November an even bigger budget for 2012 than this year’s. The 2012 budget is US$26.11bn, up 9% on this year’s plan. It is more than twice the size of the last budget before Correa came to power in 2007, which was just US$11bn. A US$4.23bn budget shortfall will be covered, according to the finance ministry, by domestic bonds and external financing, principally from China. A significant part of the budget will be financed by the tax take, which has more than doubled over the past five years. The finance ministry predicts the tax take, including import tariffs, will reach US$11.32bn in 2012. This does not include the controversial tax reform which Correa sent to congress on 24 October, which the government claims will increase the tax take by a further US$353m a year. It increases taxes on cigarettes and alcohol, and bumps up the tax on capital outflows from 2% to 5%. It also includes a new ‘green’ tax on cars. Correa said the extra revenue would allow for increased tax credits for the poor.

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