Thousands of state workers may not feel the real effect of the €104.22 salary increase approved by the government for this year, as there will be a worsening of the IRS withholding tax that will be added on top of the reductions for the Caixa Geral de Aposentação or Social Security and ADSE (Health Subsystem Civil Service) will translate into a substantially lower valuation. For example, an employee who will now earn 861.23 euros gross will in practice only have a real increase of 40 euros compared to the 757 euros he received last year. All told, he takes home 650.23 euros at the end of the month, an amount that is one euro less than the national minimum wage of 651.15 euros, after contributions and taxes.
The complaint came from the Federation of Unions of Public Administration and Entities with Public Purposes (FESAP), which belongs to UGT, which signed the Executive’s proposed agreement for the multi-year valuation of public administration salaries. The general secretary of that union structure, José Abraão, foresees “problems and protests as soon as payments start to be processed, because the workers, especially those in the lowest wage positions, who were promised an increase of 52.11 euros, the salary level of 52.11 euros,” which yields such an advance of 104.22 euros, “they do not want to accept that they get less than the net minimum wage,” he told Dinheiro Vivo. FESAP will meet this Tuesday in a general meeting, precisely to evaluate the pact signed with the executive and demand the “correction of these fiscal injustices”, José Abraão stressed, recalling that “the government had promised fiscal neutrality for salary increases”.
The State wage increase pact provides for a cross-sectional nominal increase of EUR 52.11 to gross wages of EUR 2612.03, 2% above that. But the increase in the minimum wage in the state from 709.46 euros to 761.58 euros and the additional valuations of 52.11 euros, which corresponds to a jump in the pay level for technical assistants, operational assistants with more than 30 years of career and for senior technicians between the 3rd and 14th positions, the increase doubles from 52.11 to 104.22 euros. But in thousands of cases, this profit will be absorbed by the IRS, through rebates for Caixa Geral de Aposentação or Social Security, and for ADSE.
Dinheiro Vivo calculated for a hypothetical case of a single technical assistant without children who earned 757.01 euros last year and who will receive 861.23 euros from 104 euros from January 2023 due to such a valuation. Now, in 2022, according to the IRS tables, 5% (37.85 euros) was withheld. Add to this the social contributions of 11% (83.27 euros) and 3.5% for the ADSE (26.50 euros), which yields a net salary of 609.39 euros. Since it achieved an increase of 104 euros this year, it will not include 5%, but 10% (86.12 euros), that is, it is a tax penalty of more than 48 euros. If we add up the discounts for CGA or social security (94.74 euros) and for the state health care subsystem (30.14 euros), this gives a net salary of 650.23 euros, 211 euros less than the gross amount and only 40.84 euros more compared to the net salary for 2022. The same salary, of 650.23 euros, is one euro below the minimum net salary for the civil service (651.15 euros).
When asked by Dinheiro Vivo what measures would be taken to rectify this situation, the Ministry of the Presidency, led by Mariana Vieira da Silva, which oversees the civil service, assigned responsibility for the withholding tax tables to Finance. The DV did not receive a response from the Ministry of Fernando Medina until the end of the edition.
UTAO estimates that increases in the civil service will bring $362 million to the state coffers by 2023, through increases in IRS and social security contributions.
However, it should be remembered that from the second half of the year a new model of IRS tables will come into effect, following a marginal rate logic, in accordance with the levels taken into account for the annual settlement of the tax, which means will lead to a decrease in retention. For example, a single employee without children with a salary of 861.23 euros retains 6.7% (57.7 euros), and not 10% (86.12 euros), as now, which means a relief of 28.72 euros. Instead of a net salary of 650.23 euros, the employee therefore receives 678.65 euros.
According to calculations made last October by the Technical Budget Support Unit (UTAO), which supports parliament, the increases in the civil service in 2023 will yield 362 million euros to the state coffers, due to the increase in the IRS and social contributions.
Salomé Pinto is a journalist for Dinheiro Vivo
Source: DN
