Results of Recent Referendum

As a result of the recent referendums I would be interested in hearing someone's take on how this will affect expats in Ecuador or those interested in moving to Ecuador. As I understand the results, the government is in the process of instituting the following:

1. Defamation. It is a crime to insult someone.
2. Individual journalists will be held responsible for articles that cite criticism of the government, if it is proven unfounded.
3. Mandatory healthcare for all employees and extensive labor law supporting employees.
4. Rural tax on more than 25 hectares.
5. Executive branch has power over the judicial branch.
6. Mandatory declaration of assets.
7. Tax on foreign exchange outflow.
8. Institution of capital gains tax.

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This is a topic that I'd like to see others participate in. Here's my take on them.

1. It's always been a crime here to slander or libel someone. You're guilty until proven innocent of this crime, and the sentence can be imprisonment. This one won't affect expats if we all learn to keep our mouths shut.

2. Governments are known for hiding documents. I expect Ecuador's is no exception. So if they can hide things well enough, they may be able to "prove" that criticism is unfounded.

Correa is now saying that he'll take a polygraph to "prove" that he did not supply money or arms to Colombia's FARC guerrillas. He'd probably already be suing the journalist for that one, except it came from outside the country.

Again, this one won't affect expats, since we're not media, although a web site like CaptivatingCuenca.com could be considered media, I suppose.

3. Doesn't really affect expats, except those who own businesses, and those who have maids.

4. I don't know any expats who own more than 25 hectares, which is about 62.5 acres. If they own that much, then they're probably farming it, and can afford any tax on it.

5. I for one would like to see more control over the judiciary, if it will mean less bribery by the guilty to avoid going to jail. There are no jury trials here. They're all by judge only, and we've seen them very prone to siding with whoever has the most cash.

IF, and that's a big if, Correa plans to use his powers for that purpose, it will be good for the country as a whole, including expats. So far, it looks like he plans to make it a puppet for his own purposes, so how it will affect us is anyone's guess.

6. This one was on the books in 2009, but the courts overturned it. That might be one use for #5. But Ecuador just doesn't have the tools or the resources to hunt down international assets that you don't report. I'm not saying that you shouldn't report them, just that there's no effective way for Ecuador to find them if you don't.

7. There's already a 2% tax on money leaving the country (by wire transfer). Rumors are going around that the tax will be raised to 5%. This one will only affect you if you regularly send money OUT of Ecuador.

Remember, Ecuador can't print its own currency, like the US or Canada can. So every dollar that leaves the country shrinks the economy. Correa wants his cut for your privilege of reducing the economy.

8. Unless you have a business in Ecuador, or have money invested in the Ecuador stock market (yes, there is one), there's no way to even earn a capital gain. So this one likely won't affect expats much.

One of the reasons why the rich hate Correa so much is that he's forcing them to pay taxes for the first time in their lives. That's cutting into the bottom line in a big way for many families here, some of whom are hundred-millionaires if not billionaires. A 5% tax on just one family would probably bring in more revenue than taxing 100% of the income of the bottom 50%.

The bottom line? Keep your thoughts to yourself and don't talk about your finances with others here (what THEY don't know can't hurt YOU!).

That's my take on things. Anyone else have an opinion you want to share?

Jeff