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Ecuador’s President Wants to Tax Inheritances by as Much as 77 Percent, Sparking Protests

Rafael Correa's proposed law would place heavy taxes on inheritances greater than $35,400. Opposition groups rallied outside his political headquarters on Monday, and were met with counter-protesters.
Photo by Jose Jacome/EPA

A proposed "wealth redistribution law" that would radically tax inheritances in Ecuador has sparked angry protests against the government of President Rafael Correa.

Hundreds took to the streets in the capital of Quito and in the city of Guayaquil on Monday night to protest the measure. Protesters gathered outside the headquarters of Correa's party, the PAIS Alliance, AFP reported.

Correa supporters, carrying official green flags, also demonstrated — just steps away from the opposition. Both groups insulted and rallied against each other, while Ecuadorian riot police held positions between them to avoid direct confrontations.

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Correa supporters chanted "Hey, oh, Correa will not go!" and "Reelection, reelection!" While opposers responded with screams of "Get Correa out!" and "This is Ecuador, not Venezuela!" The government's proposed law was sent on Friday to Ecuador's Congress, where Correa's party enjoys a majority.

Related: Do We Need a Global Tax on Wealth?

Avenida de los Shyris. — Luis Eduardo Vivanco (@luisevivanco)June 9, 2015

The law proposes increasing taxes on all inheritances bigger than $35,400, with an increasing scale based on the size of the inheritance. The previous law said that such tax could only be applied to inheritances larger than $68,800 dollars.

If the new law is approved, it would mean the tax for direct heirs could be between 2.5 percent and up to 47.5 percent. But in the case of indirect heirs or companies, the tax could reach 77.5 percent.

Correa, who is currently on an official visit to Belgium, said that the measure is part of his promise to "redistribute wealth" and "democratize property." Correa also denied claims that the proposed law could have a negative impact on the poorest or middle classes.

According to government numbers, each year, three out of every 1,000 Ecuadorians receive an inheritance larger than $50,000 dollars. And between 2010 and 2014, "only five out of the 16 million Ecuadorians inherited more than a million dollars," the government said.

So far, Correa's government proposal has faced the fiercest opposition among businessmen who said they fear their country is "following the steps" of socialist Venezuela. Other countries with leftists governments, such as Uruguay and Greece, have also defended and implemented similar measures.

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"They are killing us with these taxes, all so that the government can throw away and waste our money," a 58-year-old man who declined to be named told AFP.

Correa took to his Twitter account to bash the opposition.

"The same old people are preparing the 'rebellion of the bourgeoisie.' We shall respond with the 'rebellion of happiness,' and with the huge popular support that we have. We are more, many more!"

"And in 2017," he added, referring to the next presidential election, "we will defeat them again!"

Related: Ecuador Going After 'Ink Assassin' Over Controversial Political Cartoon