By Alexandra Valencia

QUITO (Reuters). Ecuador’s President Guillermo Lasso stated Tuesday that the government would gradually lower its tax on international transfers starting in January. He said this was a negative step to the country’s attempts to attract foreign investors.

Lasso is a conservative former banker and he took various steps to attract investors to help him revive the economy that was devastated by coronavirus.

Exporters are critical of the Ecuador capital exit tax. This is a charge on transfer from Ecuador to another country.

Lasso stated in an interview that the 5% tax would be reduced by 1 percentage point next year.

Lasso announced that they would reduce the capital exit taxes by 1 point starting Jan. 1, 2022. They will do this through 0.25 (reductions each quarter)

Lasso stated that it is a tax on capital entering Ecuador. We cannot eliminate this tax in one shot because it is fiscally unsustainable. It’s important to work slowly so as not to impact the public finances.

According to official figures, the tax generated $1 billion by 2020.

Lasso said that he also works to decrease the nation’s fiscal deficit. This year, it is expected to be around $4 billion. Next year, it will be $2.6 billion.

He said, “We’ll gradually reduce taxes as the economy of the country allows.”

Lasso ordered November’s implementation of controversial tax reform after legislators failed to approve or block the bill.

This reform will generate an additional $1.9B in tax revenue over its two-year period. It does this partly through increased tax contributions by larger businesses and reduced deductions for those earning more than $2,000 per monthly.