Spanish Government Negotiates Tax Compensation for Minimum Wage Earners
Discussions between Vice Presidents Montero and Díaz seek measures to support those affected by new income tax obligations post salary increase.
María Jesús Montero, Spain's first Deputy Prime Minister and Minister of Finance, and Yolanda Díaz, the second Deputy Prime Minister, are currently engaged in negotiations to develop a strategy that aims to compensate individuals required to pay income tax (IRPF) following the recent increase in the Minimum Interprofessional Salary (SMI).
Montero confirmed these discussions on Tuesday during a Senate session held for governmental oversight.
She noted, 'We are in talks with Sumar to explore some form of measure that allows us to compensate those few workers who would be required to pay taxes,' specifying that this issue affects approximately 20% of individuals receiving the SMI.
Members of Sumar have expressed optimism about the negotiations, asserting that talks are progressing 'in the right direction.' Sources close to Díaz have indicated that they are searching for a 'solution to exempt' workers earning the SMI from tax obligations.
The taxation of IRPF among SMI recipients has emerged as one of the primary sources of conflict between the coalition partners, the PSOE and Sumar.
While Sumar advocates for a complete exemption for SMI recipients from income tax, the Ministry of Finance maintains that the SMI cannot automatically be linked to tax exemptions.
Officials from the Finance Ministry argue that the SMI should continue to increase, emphasizing that tax exemption for minimum wage earners would result in significant revenue loss for the state.
Montero reiterated the ministry's position, asserting that the SMI and IRPF should not necessarily be linked.
'We believe that the SMI and the IRPF are two distinct debates,' she remarked.
Montero further indicated that efforts are underway to devise a proposal that could provide compensation for workers who would otherwise face new tax obligations due to the SMI increase.
Presently, the debate surrounding the SMI is being addressed in the Congress of Deputies.
Sumar, along with Podemos and the Popular Party (PP), has submitted three legislative proposals aimed at exempting the SMI from IRPF taxation; however, the Finance Ministry is expected to utilize its constitutional right to veto these proposals.
In a notable development, Díaz has indicated her willingness to join forces with the PP in Congress to challenge this veto.
This move is seen as unprecedented within the coalition government and illustrates the current tensions between the partner parties since their initial alliance.
Negotiations regarding the SMI have a lengthy history, but recent discussions appeared stalled, with Sumar accusing Montero of adopting a rigid stance.
These tensions had previously indicated a looming confrontation in the Congress.
Nevertheless, recent developments suggest the possibility of an alternative solution that may mitigate the strain on the coalition government.
Montero confirmed these discussions on Tuesday during a Senate session held for governmental oversight.
She noted, 'We are in talks with Sumar to explore some form of measure that allows us to compensate those few workers who would be required to pay taxes,' specifying that this issue affects approximately 20% of individuals receiving the SMI.
Members of Sumar have expressed optimism about the negotiations, asserting that talks are progressing 'in the right direction.' Sources close to Díaz have indicated that they are searching for a 'solution to exempt' workers earning the SMI from tax obligations.
The taxation of IRPF among SMI recipients has emerged as one of the primary sources of conflict between the coalition partners, the PSOE and Sumar.
While Sumar advocates for a complete exemption for SMI recipients from income tax, the Ministry of Finance maintains that the SMI cannot automatically be linked to tax exemptions.
Officials from the Finance Ministry argue that the SMI should continue to increase, emphasizing that tax exemption for minimum wage earners would result in significant revenue loss for the state.
Montero reiterated the ministry's position, asserting that the SMI and IRPF should not necessarily be linked.
'We believe that the SMI and the IRPF are two distinct debates,' she remarked.
Montero further indicated that efforts are underway to devise a proposal that could provide compensation for workers who would otherwise face new tax obligations due to the SMI increase.
Presently, the debate surrounding the SMI is being addressed in the Congress of Deputies.
Sumar, along with Podemos and the Popular Party (PP), has submitted three legislative proposals aimed at exempting the SMI from IRPF taxation; however, the Finance Ministry is expected to utilize its constitutional right to veto these proposals.
In a notable development, Díaz has indicated her willingness to join forces with the PP in Congress to challenge this veto.
This move is seen as unprecedented within the coalition government and illustrates the current tensions between the partner parties since their initial alliance.
Negotiations regarding the SMI have a lengthy history, but recent discussions appeared stalled, with Sumar accusing Montero of adopting a rigid stance.
These tensions had previously indicated a looming confrontation in the Congress.
Nevertheless, recent developments suggest the possibility of an alternative solution that may mitigate the strain on the coalition government.
Translation:
Translated by AI
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