President Rafael Correa has long used his bully pulpit to bash bankers as profit-mongers who brought Ecuador and the rest of the world to the edge of financial collapse.
Now, he says he'll give a bigger share of those profits to the country's poor.
Less than four months before presidential elections, Correa has announced the sort of bold measure that would delight anti-Wall Street protesters in the United States, who blame unchecked financial-sector greed for the economic downturn.
"Those who are earning too much will be giving more to the poorest of this country," the charismatic leftist said in a weekend address. "The time has arrived to redistribute those profits."
Under his plan, taxes would go up on bank holdings abroad and an excise tax on financial services would increase, with the proceeds used to increase lump-sum payments for single mothers, the elderly poor and other needy Ecuadoreans.
Correa said the move would raise US$200 million to US$300 million a year, money that would not just help pay for the increased monthly subsidies but also would finance "other wealth redistribution activities".
The increase was first suggested by the very man who is likely to be Correa's top challenger in February elections. Guillermo Lasso said that if he were elected, he would boost the monthly aid payments that 1.2 million Ecuadoreans receive to US$50 from the current US$35.
But Lasso, former director of Guayaquil Bank, did not intend to underwrite the increase by raising taxes on banks already heavily regulated by Correa, who has a doctorate in economics from the University of Illinois at Urbana-Champaign.
Duty is to the poor
The proposal is virtually guaranteed to take effect because Correa introduced it as an emergency measure, which automatically becomes law if Congress doesn't reject it within 30 days. Correa's opponents don't have enough votes to knock it down.
"My duty is to the poor," Correa said Saturday in his weekly TV and radio show, which pre-empts all other programming. The self-described 21st-century socialist, who says his politics are guided by the teachings of Christ, even went so far as to call out well-known Ecuadoran banking families that would be hit, "the Pachanos, the Egas and the Lassos."
Lasso said he's pleased his idea of boosting monthly aid payments to the poor has been embraced. But along with the rest of the banking industry, he says Correa will be weighing it down with an unfair tax burden.
"It's not the way to go, because it only creates more obstacles for entrepreneurs, for those who create jobs," Lasso told reporters after Correa announced the bill last Friday.
Produbanco's president, Abelardo Pachano, told the newspaper El Comercio that the proposed tax would "destabilise the banking industry, weaken it and clip its wings." The victims would be Ecuador's seven million depositors, he said, who account for nearly half the small South American nation's 15 million people.
Lasso, 57, remains the chief stockholder in Guayaquil Bank and has not formally announced his candidacy.
Correa, who was first elected in 2006, has built a solid base of support through populist programmes that have widened the social safety net and broadened investment in education.
He has doubled public spending, and Ecuador now devotes a greater share of its economy, 10 per cent of gross domestic product, to public investment in infrastructure, education and other purposes than any other nation in Latin America and the Caribbean.
Correa, whose only previous job in government was as finance minister, has alienated bankers before, both at home and abroad. Under his watch in 2009, Ecuador defaulted on nearly US$3.9 billion in external debt.
Banking profits have climbed steadily since Correa won election, from US$239 million in 2006 to US$393 million last year, even as banks were forced to reduce fees for credit cards, repatriate funds held abroad and purchase public debt.
Ecuador's private bankers' association complains that it already pays the state about US$309 million annually in taxes and other fees that eat up nearly 80 per cent of its profits.
The director of the national revenue service, Carlos Marx Carrasco, contested that figure, claiming the banks only paid US$170 million in taxes.