Ecuador hikes taxes to pay for post-quake reconstruction

http://www.foxnews.com/world/2016/04/21/ecuador-hikes-taxes-to-pay-for-post-quake-reconstruction.html

QUITO, Ecuador –
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The damage from 7.8-magnitude quake adds to already heavy economic hardships being felt in this OPEC nation triggered by the collapse in world oil prices. Even before the quake, Ecuador was bracing for a bout of austerity, with the International Monetary Fund forecasting the economy would shrink 4.5 percent this year.

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

People with more than $1 million in assets will be charged a one-time tax of 0.9 percent on their wealth, while workers earning over $1,000 a month will be forced to contribute a day's wages and those earning $5,000 a month the equivalent of five days' pay.

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Unlike the deadly earthquake that ravaged Chile in 2010, when commodity prices were at a high and most of South America was booming, Ecuador must rebuild with prices of oil, the lifeblood of its economy, near a decade low. Manufacturing is also suffering because the economy is dollarized, depriving companies in Ecuador of the same jolt the rest of South America has experienced from devalued currencies.