From 2024, the minimum IRS existence, i.e. the level up to which income is exempt from IRS, is no longer linked to the national minimum wage, according to the proposal of the State Budget for 2023 (OE2023). This could indicate that in two years, whoever receives the minimum compensation, which should be 810 euros, will pay IRS. But the Minister of Finance, Fernando Medina, refuted this idea, this Friday, during a hearing in parliament as part of the debate on OE2023, arguing that this employee can deduct general and family expenses, with a ceiling of 250 euros, and , thus negating the impact of the tax.
According to Fernando Medina, “the option for this change in the subsistence level and the updating of the minimum wage translates into the integration of more people into the income tax system, which does not mean that these people pay taxes, because at the head of the deduction mechanisms will come into effect. ‘, namely the €250 general and household expenses deduction used today by the ‘overwhelming majority of taxpayers’. “This means that no tax will be levied on a range of wages around the minimum wage,” he emphasizes. Medina concludes: “It is not true that this [o mecanismo] corresponds to the payment of tax in the following year and of the following years.”
According to the OE2023 proposal, “the minimum subsistence reference value is equal to the highest between 10 640 and 1.5 x 14 x Social Support Index (IAS)” which will increase by 35.5 euros to 4787.7 euros in 2023 . That is, this level will be equal to the larger of the two values: either 10,640 euros, which in 2023 is equivalent to 14 times the minimum wage of 760 euros, or 10,052.7 euros (1.5 x 14 x IAS) . With this new formula, employees with the minimum wage will remain exempt in 2023, but in 2024, when the minimum wage is 810 euros, the gross annual salary will be 11,340 euros, 700 euros higher than the highest value. the minimum existence: 10 640 euros.
From what DN/Dinheiro Vivo found, a minimum wage of 810 euros in 2024 will have to pay 280 euros in tax, but 250 euros can be deducted in general and family expenses, in addition to those related to children, education or health, abolition of the tax.
In two years’ time, however, the minimum wage will increase more, as will the tax: in 2025 the minimum wage will jump to 855 euros and the amount to be paid to IRS is 500 euros; and in 2026, the last year of the legislature, the guaranteed minimum wage will go up another level to 900 euros and then the tax amount will be 700 euros.
In this SO2023, there are no provisions for increases in IRS deductions. For the time being, the government has chosen to update the income tax brackets by 5.1%, lower the rate of the second bracket from 23% to 21%, affecting the lowering of the average rates of the next tiers, and the reform of the minimal existence. All these measures cost 500 million euros.
Medina excludes new injection in Novo Banco and does not foresee losses on the sale of TAP
Confronted by the PSD with recent warnings from the Technical Unit for Budget Support (UTAO) accusing the government in the proposed 2023 state budget (OE2023) of the risks associated with Novo Banco, Finance Minister Fernando Medina stated that “no other transfer being considered” to that bank.
This Friday, the official responded to questions from the Social Democratic bank in parliament, in the context of the discussion on the general proposal of the state budget for 2023. Fernando Medina said that “the Resolution Fund has already communicated that it believes that it is not necessary to making the final payment of 200 million euros also takes the government into account, although the contractual limit is different”.
The finance minister also recalled that “there is a judicial dispute that puts the state against de Novo Banco”. Then to reassure the deputies: “In known cases, the State has won”.
With regard to the TAP file, which was also criticized by the UTAO for the “secretness” in the OE2023 regarding possible new aid under the restructuring plan, Fernando Medina clarified that the state will not inject a penny more into the airline beyond the EUR 990 million, the last tranche of the 3.2 billion plan to be carried over until the end of the year.
“The state is only authorized” by Brussels “up to the limit of 990 million euros, 600 million in the national accounts”, the official stressed, emphasizing that “the state can no longer make injections above this limit”.
Fernando Medina also ruled out possible losses to the state with the process of re-privatization of TAP. Confronted with this question, the Minister of Finance only answered in the House of Representatives in the context of the general discussion about the National Budget 2023 (OE2023): “There are no revenues or expenses foreseen with the privatization of TAP, which will be done on time and in a way that values the company and the national interest.”
The answer comes two days after Infrastructure Minister Pedro Nuno Santos admitted that the company’s sales price could be lower than the €3.2 billion that the state will inject into TAP as part of the restructuring.
Two days ago, October 20, the official said at a hearing of the parliamentary economics committee that he has no idea yet when and how the re-privatization of TAP will begin, but he was clear in decoupling the operation from the public. aid to the airline. : “Selling for less than the injection… Let’s see how the IPO will happen. An assessment will be made independent of the value injected into the company. This value will be determined when the IPO takes place”.
Pedro Nuno Santos also defended that “when you invest in a public service, you don’t ask if it pays off”. And he added: “The investment in TAP, the bailout, has an impact on the Portuguese economy from a macro point of view, it has an impact on wealth creation, there is a return for thousands of companies”.
Minister admits larger pension increases
Finance Minister Fernando Medina on Friday, during the parliament hearing on the debate on the general proposal of the national budget for 2023 (OE2023), again acknowledged that pensions would rise more sharply in 2023 if inflation, in the housing market, in November , is higher than the government’s forecast of 7.4%.
It is recalled that, as a counterpart to the bonus of more half-pension granted in October to pensioners from Social Security and Caixa Geral de Aposentações (CGA) with benefits up to 5318.4 euros, the government has introduced the pension update formula that provides for increases between 8% and 7.1% in 2023, reducing the value of the increase for variations between 4.43% and 3.53%.
Confronted with the hypothesis that inflation in November will be higher than the 7.4% estimated by the government, Medina clarified: “If we come to November and the inflation data in November shows that it was different upwards from what we have approved here will correct this value so that the 2023 increase is corrected.”
But this correction always takes into account the pension supplement paid in October, ie it will hardly reach the original values of the formula between 8% and 7.1%.
“Support does not remove the challenge of rising prices”
The finance minister warned at the start of the discussion on the state budget’s general proposal for 2023, that extraordinary support to families to mitigate the impact of inflation “does not remove the challenges of rising prices”. However, he stressed that these measures “help to mitigate their effects”.
On balance, Fernando Medina revealed that this month “the government has already sent 1,120 million euros to 3,850,000 Portuguese, of which 420,000 are children”. This aid corresponds to the aid of 125 euros addressed to taxpayers with a gross monthly income up to 2700 euros, at 14 months, and to beneficiaries of social benefits who are not retired, with the check for 50 euros per dependent person up to 24 years , regardless of the parent’s salary, and up to the plus half-pension bonus for retirees receiving benefits up to EUR 5318.4 per month.
“This support corresponds to extraordinary support for workers, the allowance for pensioners, support for beneficiaries of social benefits and children,” stressed the minister, recalling that “Next Monday, Social Security will pay 125 euros to more than 1.6 million beneficiaries of social benefits receive a benefit”.
With regard to the transfers to be made by the tax authorities, Medina guaranteed that “the process will be finalized in the coming weeks”.
This aid “added to a broader package that began in October last year reached EUR 4 billion, about 1.8% of GDP,” the finance minister recalled.
Under update
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Source: DN
