Guayaquil begins to overcome falls in sales and collection

In 2020 sales fell 11% and are now recovering 15%. It is the second city with the most tax revenues in Ecuador. Get to know the top ten.

Five years before the pandemic, sales in Guayaquil were growing more than in other large cities in the country. COVID-19 arrived and everything went into a tailspin and although this city felt the worst blow of the health crisis - due to the high level of infections and deaths - its economic activity did not fall as much as in others.

In the first half of 2021, $2,068,651,000 were generated in taxes in this main port, according to statistics from the Internal Revenue Service (SRI). This amount represents an increase of 8% compared to the first six months of 2020.

And it is that 3 of every 10 dollars collected in the country are generated in Guayaquil - which this July 25 commemorates the 486 years of its founding process. It is the second city with the highest tax revenue for the State.

These are the ten cities with the highest tax collection from January to June 2021:

1. Quitocon $ 3.255′839.000
2. Guayaquilcon $ 2.068′651.000
3. Cuencacon $ 349′577.000
4. Rumiñahuicon $ 118′001.000
5. Durancon $ 111′764.000
6. Hintcon $ 103′235.000
7. Machalacon $ 83′724.000
8. Samborondoncon $ 79′327.000
9. Latacungacon $ 58′389.000
10. Mantacon $ 57′335.000

Purchases taxed with value added tax (VAT) made in Guayaquil contributed almost $150 million more to the treasury so far this year. That collection rose from $750,038,000 to $897,729,000. On the other hand, income tax revenue fell from $748,272.00 to $690,270,000.

Being a port city, there is a greater contribution to the treasury of the taxpayers of this canton due to taxes paid on their imports. Evaluating its economic and productive activity, for the president of the Chamber of Industries of Guayaquil, Francisco Jarrín, implies carrying out the same evaluation for the rest of the cantons within the area of ​​influence.

Between 2015 and 2019, total sales - local and exports - of companies and businesses domiciled in Guayaquil grew 2% per year, a rate higher than the 0.6% per year recorded in the case of Quito, and 1.8% in Cuenca; and below the 10% per year registered in Durán - part of the so-called Greater Guayaquil.

During 2020, a critical year due to the pandemic and mobility and capacity restrictions, total sales in Guayaquil decreased by 11%, in Quito they fell by 22%, in Cuenca 17% and in Durán 7%.

But this year, between January and May, Guayaquil registers an increase in sales of 15% compared to the same period in 2020. And the significant falls last year mean that there are now increases, in Quito of 19%, Cuenca of 32% and Durán of 15%. It is expected to recover 2019 levels.

"We consider that Guayaquil is not only a city that is undergoing reactivation, but that it has managed to maintain a sustainable pace in this process. This is due to the high economic and productive activity generated around agroindustrial production that is benefited by the proximity to the Guayas River basin, and that finds benefits in access to roads and ports that facilitate the placement of this production in international markets," comments Jarrín.

And with a tax reform pending by the Government, the Chamber of Industries insists on a reduction in the tax burden "that distorts economic, productive and investment activities, as occurs, for example, with the tax on the outflow of foreign currency (ISD)."

The amount collected by this ISD in Guayaquil rose from $140 million in the first half of 2020 to $168 million in the first half of 2021.

In the special consumption tax (ICE) there are ups and downs in collection. There is growth in vehicles (70%), soft drinks (65%), beverages (46%) and beers (14%), unlike prepaid television (38%) and telephony (8%). This is attributed to the fact that short-term consumption such as drinks in general, or consumption under telephone or television recharge are now prioritized versus the option of contracts subject to monthly payments.

In vehicles, this sector already began to see a recovery in the first quarter at a general level, with an increase of 13.72% in sales, according to the Association of Automotive Companies of Ecuador.

42 out of every 100 people occupy a fully employed position in Guayaquil

The president of the Guayaquil Chamber of Industries, Francisco Jarrín, considers that it is also favorable for the productive and economic activity of the city to have a labor market in better conditions in relation to the rest of the country, since while, at the national level, as of May 2021, only 31 out of every 100 people held a fully employed position, at the Guayaquil level, 42 out of every 100 did so.

The union considers that the recent tariff reductions have generated very good expectations at the level of the productive and business sector, but sees it necessary to take into account that there is still a considerable distance with respect to neighboring countries such as Colombia and Peru, not only because of their lower tariff burdens in general terms, but because of the trade agreements they have, mainly with the United States, which not only favors the entry of goods without payment of tariffs, but also the placement of products at more competitive prices.

Commerce, services and industry are the sectors with the most weight. The most recent data from Business Statistics from the National Institute of Statistics and Censuses (INEC) shows that while at the national level, commerce had 37.72% of total sales in 2019, in Guayas that sector represented 39.85%. Services was 25%, there wasn't much difference. While the manufacturing industry also had more weight in Guayas with 23.04%, at the country level it was 20.96%.