Spanish Treasury Proposes Tax Deduction for Minimum Wage Earners
New fiscal measure seeks to alleviate income tax burdens without raising the exemption threshold.
The Spanish Ministry of Finance has introduced a specific deduction aimed at exempting workers earning the Salario Mínimo Interprofesional (SMI) from paying the Impuesto sobre la Renta de las Personas Físicas (IRPF), the country's income tax.
This measure is designed to alleviate the tax burden without modifying the current exemption threshold.
Finance Minister María Jesús Montero has ruled out increasing the exemption threshold, a move supported by some coalition partners, citing a potential cost to the state between 1.5 and 2 billion euros.
In contrast, the proposed deduction is estimated to have a much lower financial impact, projected to be just over 200 million euros.
This policy initiative follows the recent increase of the SMI to 16,570 euros gross annually, which has resulted in approximately 20% of SMI recipients now liable for IRPF.
The Ministry of Labor argues that this taxation effect undermines efforts to ensure that the minimum wage reaches 60% of the average net salary, as mandated by the European Social Charter, and is advocating for a total exemption from tax.
Negotiations between the Ministries of Finance and Labor have resulted in tensions within the government.
Labor Minister Yolanda Díaz is calling for a permanent mechanism to guarantee that the SMI remains exempt from taxes in the future, while the Finance Ministry is only willing to implement a one-time deduction related to the current increase in the minimum wage.
The government is also facing pressure in Congress, where proposals from various parties, including Sumar, Podemos, and the Popular Party, are under debate to raise the tax exemption threshold.
The Ministry of Finance has indicated that it will veto these initiatives unless an agreement with the Ministry of Labor makes such measures unnecessary.
Minister Montero has emphasized the government's aim to ensure that the SMI continues to rise significantly, while maintaining a progressive fiscal contribution.
Ongoing discussions between the ministries are anticipated to conclude with decisions in the coming days.
This measure is designed to alleviate the tax burden without modifying the current exemption threshold.
Finance Minister María Jesús Montero has ruled out increasing the exemption threshold, a move supported by some coalition partners, citing a potential cost to the state between 1.5 and 2 billion euros.
In contrast, the proposed deduction is estimated to have a much lower financial impact, projected to be just over 200 million euros.
This policy initiative follows the recent increase of the SMI to 16,570 euros gross annually, which has resulted in approximately 20% of SMI recipients now liable for IRPF.
The Ministry of Labor argues that this taxation effect undermines efforts to ensure that the minimum wage reaches 60% of the average net salary, as mandated by the European Social Charter, and is advocating for a total exemption from tax.
Negotiations between the Ministries of Finance and Labor have resulted in tensions within the government.
Labor Minister Yolanda Díaz is calling for a permanent mechanism to guarantee that the SMI remains exempt from taxes in the future, while the Finance Ministry is only willing to implement a one-time deduction related to the current increase in the minimum wage.
The government is also facing pressure in Congress, where proposals from various parties, including Sumar, Podemos, and the Popular Party, are under debate to raise the tax exemption threshold.
The Ministry of Finance has indicated that it will veto these initiatives unless an agreement with the Ministry of Labor makes such measures unnecessary.
Minister Montero has emphasized the government's aim to ensure that the SMI continues to rise significantly, while maintaining a progressive fiscal contribution.
Ongoing discussions between the ministries are anticipated to conclude with decisions in the coming days.
Translation:
Translated by AI
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
