Ecuador to increase VAT to 13%

President Daniel Noboa will permanently increase Ecuador's value-added tax (VAT) by one percentage point to 13% to finance the country's fight against criminal gangs.

Opposition parties Revolución Ciudadana, led by former president Rafael Correa, and Social Cristiano did not muster enough votes to stop the tax increase. 

With a green light from the economy and finance ministry, Noboa originally wanted to increase the VAT to 15% from 12% to pay for mounting security costs following a crime wave that erupted in early January. The outbreak in violence led the president to declare an "internal armed conflict," while labeling 22 criminal groups "as terrorist organizations" that are now legitimate military targets.

In the face of opposition in the legislature, Noboa limited the VAT increase to 13%, though opposition lawmakers still opposed the measure. On Friday, Noboa prevailed, as the national assembly could not line up the 92 votes out of 137 to override the president's veto.

The VAT increase will come into effect once it is published in the official government gazette.