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  • Supporters of Lenin Moreno yell in support outside the polling station as Moreno casts his vote during the presidential election in Quito.

    Supporters of Lenin Moreno yell in support outside the polling station as Moreno casts his vote during the presidential election in Quito. | Photo: Reuters

All public servants and elected officials in Ecuador will be barred from holding wealth in offshore accounts.

Ecuador will likely make history as the first nation in the world to vote in a referendum — which according to preliminary results is expected to pass — to bar public officials from hiding wealth in offshore tax havens.

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The referendum question, announced by Correa last November, asked voters: “Do you agree that, for those holding a popularly elected office or for public servants, there should be a prohibition on holding assets or capital, of any nature, in tax havens?”

With 67 percent of the votes counted so far, 54.76 percent of the people voted "Yes" and 45.24 percent said "No."

With the approval, all public servants and elected officials will have one year to bring offshore capital back to the country or they will be removed from office for violating the policy aimed at combating tax havens and increasing accountability of public officials.

Foreign Minister Guillaume Long, who has championed Ecuador’s fight to ramp up global regulations to stamp out tax havens, has described the referendum as one small part of the country’s larger campaign calling for coordinated international action.

Long said this "shows that the people continue to rely on government management for fighting corruption of both national and international bureaucracies."

According to Oxfam, which is among the non-profit organizations that have endorsed Ecuador’s fight against tax havens, tax dodging by multinational corporations costs poor countries at least US$100 billion every year.

"Following the Panama Papers and other tax haven scandals, people are fed up with the serious damage that tax havens cause to our economies," Long added, "That is why we will also be stepping up our global leadership in the campaign for a new United Nations body to put an end to this shameful hidden network of tax theft.”

A clampdown on offshore havens and tax dodging could lift 32 million people out of poverty in Latin America alone, equivalent to the total population of people in poverty in Ecuador, Bolivia, Colombia, El Salvador and Peru. In Ecuador, it is estimated that a staggering US$30 billion — one-third of the country’s GDP — is stashed outside the country.

In an open letter published in the Guardian Sunday, a coalition of progressive campaigners from the U.K. — home to many of the law firms that facilitate global tax dodging — described Ecuador’s referendum as “innovative” and expressed “hope that Ecuador’s leadership on this issue will inspire other governments to make bold moves too.”

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The country launched an Ethics Pact Against Tax Havens that promotes a solidarity-based “ethical economy” that puts people before the financial interests of a few wealthy elites and corporations. The pact aims to catapult debate on tax havens onto the international stage and spark a move toward regulation to eliminate the “immoral practice” of offshore tax dodging.

Moreno’s closest rivals, right-wing candidates Guillermo Lasso and Cynthia Viteri, have both proposed slashing taxes in the country where the corporate tax rate of 22 percent is already just over 7 percent lower than the average for the Americas.

Ecuador also headed to the polls Sunday to elect a new president and national assembly, deciding the fate of President Rafael Correa’s 10-year Citizens’ Revolution. Lenin Moreno, Correa's former vice president is leading with a 39.26 percent of the vote for Alianza Pais, bringing him closer to the 40 percent threshold that he needs to avoid a second round. The Alianza Pais party has secured about 75 seats in the national assembly, giving them an absolute majority again, according to preliminary results.

Former banker Lasso of the right-wing CREO party, trailed more than 10 percent behind the presidential favorite with 28.31 percent, as 96 percent of the votes have been counted.

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