2024-02-06 12:27:28
The Council of Ministers held this Tuesday approved two important economic measures linked to each other. On the one hand, the increase in the interprofessional minimum wage (SMI) to 1,134 euros per month with retroactive effects from January 1. On the other hand, and related to this improvement, a modification in the personal income tax (IRPF), designed to cushion the tax impact that, otherwise, the increase in the SMI would have on lower-income taxpayers. The joint fiscal cost linked to this measure will exceed 1.3 billion euros.
The first vice president and Minister of Finance, María Jesús Montero, explained at a press conference that the new salary improvement, of 15,875 euros per year, provides a different figure than that contemplated in the previous minimum tax-exempt minimum. For this reason, “just as we did last year”, the increase in the SMI will be accompanied by a legal change to set the new limit at 15,876 euros, one euro above the new threshold. This “will allow taxpayers who receive the SMI to be exempt from the corresponding taxes,” Montero added.
From here, and to avoid jumping errors for those workers who are slightly above the new minimum wage, the Treasury has also designed an increase in the reductions in withholdings for incomes of up to 21,000 gross euros, which will be extended to 19,747. .5 euros net. In practice this means that those income from work between 15,876 euros and 19,747.5 euros will suffer less withholdings than would otherwise apply.
Montero has stressed that this legal modification will be reflected in the draft of the next General State Budgets, which is being negotiated within the Government and is in danger due to the PP’s blockade of the fiscal path designed by the Executive. Therefore, in the meantime, the tax regulations are modified to shield this tax reduction with immediate effect. The measure, according to Treasury calculations, will affect about 5.2 million taxpayers, who will save around 1,385 million euros in 2024.
Minister Montero has taken advantage of her appearance to attack the opposition’s tax proposals and has given a series of examples that, in the opinion of the Executive, illustrate the tax differences that exist between the PSOE and PP governments.
The first case presented by the first vice president refers to that of a person who earned 15,876 euros annually in 2018, which now represents the SMI. In that year, the withholding was 7%, which meant a tax liability of 1,111 euros per year. In 2023, Montero continued, retention decreased to 2% and in 2024 it will reach zero. “It is a saving of 1,111 euros compared to what was paid with the Popular Party in 2018.”
Another example, which is not chosen at random because it represents the most common salary in the country, is that of the worker who receives 18,500 euros per year. If in 2018 the personal income tax withholding was 2,000 euros, in 2024 it will be 1,128 euros, “almost half of what was paid with the Popular Party.” “It is 43.55% less than what would be paid if the PP’s personal income tax were still in force,” Montero insisted. The last case is that of a retiree between 65 and 75 years old with a benefit of 17,000 euros per year. Six years ago, the withholding of 8.6% meant the payment of 1,462 euros. Now, it falls to 1.32%, bringing the fee to 224 euros. This taxpayer will pay 62.7% less in withholdings in 2024 than in 2023 and 84.6% less than in 2018.
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